The Hidden Cost of More

I recently searched how rich I am. The search led me to a “Giving what we can” web page, which argued that based on my annual income, I am in the top 1%. Of course, this website only compares income and doesn’t care about the cost of living. Yet I earn a lot, and I still don’t feel so rich somehow. I am sure many of you have a higher income and also don’t feel that rich. Why is that? The answer is in our consumption psychology. Let’s explore.

Most of these thoughts are coming from these three sources:

1. Netflix documentary: Buy now, the shopping conspiracy
2. Book: Early Retirement Extreme by Jacob Fisker
3. Book: The Elephant In The Brain by Kevin Simler and Robin Hanson

I recommend everyone to ‘consume’ this material if you resonate with this blog ;D

What We See (and Buy)

As technology improves, we get to produce stuff faster, cheaper, and crucially more. Corporations need to earn more profits, so naturally, they want to sell more. To sell more, they have to obviously produce more. We produce over a billion smartphones each year!!

Just producing more is not enough. They also need to convince us to buy more. If nearly everyone already has a smartphone, why would they buy more? Maybe because the existing ones are not good enough anymore. They don’t have the shiny new feature. They are not repairable once a small part of them starts to malfunction. Or some other reason. The point is they need to sell more. And since they are successful, we are buying (and consuming) more. And not just smartphones, but nearly everything. Including digital stuff for which we don’t pay money (we pay attention).

So, one thought that explains our unhappiness is that we are forced into consuming too many things that do not really give us sufficient long-lasting joy. On top of it, we create so much waste that we will talk about later in this blog. But this external driver is not the complete answer to why we buy more.

The Internal Driver

While external sources can manipulate us into consuming more, much of our consumption is a result of how our brain works to better fit into society. We consume because everyone around us consumes. Consuming something gives us some pleasure immediately. This instant reward may have worked towards developing a habit. Have you ever bought something just because you were feeling a little sad? Clicking that “Buy Now” button on Amazon gave you some dopamine release, and at least for a moment, you felt happy. If you think you are master of your habits, think again.

It is hard to define “basic needs.” My expenses have grown with my salary, and my brain manages to somehow justify each additional cost in the name of “a basic need.” If the expenses keep increasing with time, my income must also grow. For that, I have to work harder and have a full-time job (or work harder if I have my startup). If I have a full-time job, I don’t get to spend time on many important things. For example, I don’t get time to exercise two hours a day (which is needed for my age). Therefore, my body is not as good as it needs to be. If it dysfunctions, I have to spend money on getting it fixed. Where would the money come from? My job, of course. A complete cycle.

Exercise is just one example. Many of my colleagues don’t have time to cook meals. So, that part is outsourced to restaurants. They are obviously more expensive in the short term (cost of food) and in the long term (weaker health due to poor quality food). They can afford it because the full-time job pays just enough.

The only way to break from that cycle is to consume less. If the expenses are low, savings grow fast, and we can retire early. Somehow, this doesn’t happen because each new expense is justified as a basic need. If only we could stop justifying each new purchase as a basic need.

The Hidden Agenda

The book “The Elephant In The Brain” goes even deeper into internal drives. The main premise of the book goes as follows.

Humans didn’t evolve to have a large brain to survive from other animals, but rather to compete with other humans to get better social connections and status. Norms and Deception are two areas that helped us grow our brains. We have many norms (legal rules, moral boundaries, etc) to avoid excessive competition that could harm us. Designing such norms is a hard task; therefore, the brain has to work hard. At the same time, competition is necessary, and the norms are hurdles to getting better results. So, we mastered the art of deception (both performing and detecting). 

Since it is easier to lie if we don’t know that we are lying, our brain often hides many major motives behind most of our actions. Our brain has many modules or parts. One part of the brain works like a press secretary. Its job is to explain the reasons behind why our brain likes some things or wants to do some things. It has some limited knowledge of what is going on, but like a press secretary, not everything is known. So, like a press secretary explains the policies of the government, this part of the brain explains the signals from our brain. This small barrier helps our brain hide some selfish motives from ourselves so that we can deceive other humans better. Many experiments have confirmed that we are really good at providing (sometimes inaccurate) explanations even when we don’t have enough data.

While we might consciously claim to buy goods for their practical utility or intrinsic value, a significant hidden motive is often “signaling.” This is a modern take on Thorstein Veblen's theory of “conspicuous consumption.” We buy things not just for their function, but to signal wealth, status, taste, intelligence, generosity, or adherence to certain group values.

For almost any purchase, there's an “official” story (e.g., “I bought this car because it's fuel-efficient and safe”) and a “hidden” story (e.g., “I bought this car because it projects an image of success and sophistication”). The book emphasizes that the hidden story often explains a surprising, and sometimes majority, amount of our behavior. We might genuinely believe the official story, which is part of the self-deception. But unfortunately, it leads to many irrational purchases.

Our extra consumption leads to more waste. This has a deeper effect on our environment. Think about where these smartphones go? We throw them away, but “away” does not exist. The big corporations know all of these things. They make things that are harder to repair and last less. They lie about recycling to make us feel better about our social values. Or many times, they don’t need to “lie” because they can just “hide.” They control more by influencing the policy-makers. And of course, all the knowledge of how the human brain works is used for marketing the products.

What can we do?

Well, now that we have some insights on why we consume, we can use them to control our buying behavior. 

Many people suggest a small pause before buying stuff. This can help us reflect on our purchase: Is it really a basic need? What are the alternatives? Are there any signals I am trying to send by purchasing this? Will this give long-lasting happiness, or would it add to the clutter? We can make changes to our core values. Prefer making existing stuff work for our needs instead of buying new. Repair more. Find creative uses of items that we already own. Value “freedom” more than “possessions.” Give up stuff to earn more freedom.

Let’s end with a quote:

“It’s time to rewrite your shopping list, and in doing so, rewrite your story. Because the richest lives are built not on what we buy, but on how we truly live.” – Gemini