Consuming 'luxury' goods as deprived individuals

[sea_saw]

I thought this piece from LSE was an interesting read:
http://blogs.lse.ac.uk/businessreview/2017/05/22/what-research-tells-us-about-the-avocado-toast-controversy/

Basically their argument is that we all position ourselves in relationship to those around us, and in an unequal society, visible consumption of 'luxuries' allows the disadvantaged to keep up with the level of status that seems to be required to 'stand in society'. The more unequal the society, the higher the pressure to even out the inequalities in this way (even if it's long term counterproductive to those in the disadvantaged position).

In a way none of that is news, and we're all used to grumbling about people draining their resources on car loans and eating out and so on. But what I found shocking was this paragraph on just how deeply ingrained this is to human nature:

Our own research has shown that even malnourished households who live under $1 a day in India spend relatively more on luxuries such as clothing, and less on (cheaper) caloric-intensive products such as wheat or rice in areas with higher levels of inequalities. According to our estimation, the caloric cost of relative deprivation amounts to 10 to 15 percent of the mean daily per capita calorie consumption of the poor.

Status really does feel that life-or-death to our animal brain that we'd prioritise it over food.

Less painfully and more entertainingly, on the other end of the scale:

...despite a major upscaling in housing size, there was no increase in household’s expressed satisfaction with their homes after the 1980s. Since households value the relative size of their house, the value of their home goes down when bigger houses are built around them. They are in turn incited to build even bigger houses.

I think this ties neatly into research showing that more equal societies are happier than less equal ones, even when the average citizen of The Land Of Massive Wealth Disparities is by absolute measures better off than the average citizen of We All Just About Get By.

Since it seems to be very human to compare our lots and strive for success, I wonder if part of the benefit of MMM is to give us an 'out' from the mainstream version of this, and a new set of standards to measure ourselves against.

(Lest this thread becomes a rehash of the original avocado debate, here's the place:
https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/millennials-cant-buy-homes-because-theyre-wasting-money-on-avocado-toast/ )

[ysette9]

Very interesting. I had heard a version of this before and it makes sense, thought I was surprised that it held true even in the very poorest situations where people don't have enough to eat. You just can't get around human nature in the end, no matter how counter intuitive that nature may be.

[Jrr85]

I thought this piece from LSE was an interesting read:
http://blogs.lse.ac.uk/businessreview/2017/05/22/what-research-tells-us-about-the-avocado-toast-controversy/

Basically their argument is that we all position ourselves in relationship to those around us, and in an unequal society, visible consumption of 'luxuries' allows the disadvantaged to keep up with the level of status that seems to be required to 'stand in society'. The more unequal the society, the higher the pressure to even out the inequalities in this way (even if it's long term counterproductive to those in the disadvantaged position).

In a way none of that is news, and we're all used to grumbling about people draining their resources on car loans and eating out and so on. But what I found shocking was this paragraph on just how deeply ingrained this is to human nature:

Our own research has shown that even malnourished households who live under $1 a day in India spend relatively more on luxuries such as clothing, and less on (cheaper) caloric-intensive products such as wheat or rice in areas with higher levels of inequalities. According to our estimation, the caloric cost of relative deprivation amounts to 10 to 15 percent of the mean daily per capita calorie consumption of the poor.

Status really does feel that life-or-death to our animal brain that we'd prioritise it over food.

Less painfully and more entertainingly, on the other end of the scale:

...despite a major upscaling in housing size, there was no increase in household’s expressed satisfaction with their homes after the 1980s. Since households value the relative size of their house, the value of their home goes down when bigger houses are built around them. They are in turn incited to build even bigger houses.

I think this ties neatly into research showing that more equal societies are happier than less equal ones, even when the average citizen of The Land Of Massive Wealth Disparities is by absolute measures better off than the average citizen of We All Just About Get By.

Since it seems to be very human to compare our lots and strive for success, I wonder if part of the benefit of MMM is to give us an 'out' from the mainstream version of this, and a new set of standards to measure ourselves against.

(Lest this thread becomes a rehash of the original avocado debate, here's the place:
https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/millennials-cant-buy-homes-because-theyre-wasting-money-on-avocado-toast/ )

In the U.S., this showed up previously in the argument over conspicuous consumption in poor communities.  The gist of it was that minority communities in the U.S. would be criticized for their consumption patterns, largely criticism over the amount of money spent on sneakers, purses, clothes, etc., but when you look at the data, there was no difference across races and the entire difference was driven by the composition of the communities in which people lived.   

But I think the findings were basically the opposite of what this article is stating.  For the U.S., I think the findings were that if you had a community of mixed socioeconomic status, the lower income people were more likely to be strivers who saved and tried to better themselves, but in communities consisting of just lower income people, the low income people tended to be more likely to spend on conspicuous consumption.  Can't remember where this was addressed (maybe by the Freaknonomics authors on their blog?), but I think that was the gist of it.   

[Sydneystache]

You can also look at the powdered infant milk formula debate being marketed in developing countries. The issue is these countries do not have adequate access to clean water but such is the status pressure that poor mothers BUY formula because they want the best yet they could breastfeed their kids for free. As a result, the babies get sick because of dirty water.

Anyone who has been to developing countries would see the status pressure to appear rich when they are abjectly poor, especially when said country is as stratified such as India. You can also see it with the proliferation of smartphones. A couple of years ago I lived in said developing countries and bought a basic Nokia to handle calls and texts but it was extraordinary how many people I encountered had the then latest smartphones.

I suppose if it makes them feel rich, then so be it - it's a sliver of joy when their home is in the slums.

[obstinate]

I buy this for goods that confer an appearance of status, but avocado toast does not seem like that to me. Avocados are good. Toast is good. Hyperbolic discounting is a thing. There doesn't really seem to be much more to it than that. Eating avocado toast is certainly not going to make anyone appear to be high status.

[RFAAOATB]

One thing I've noticed, I can not imagine myself looking poor.  I wear clothes from the salvation army one day and a tie the next.   I'm a white male computer programmer.  Even if I dressed as slobby as possible I don't think I could be read as poor.

This also means I have trouble enjoying expensive clothes as the status boost is less noticeable for me.  I don't go to the bars as much as I used to as the value of alcohol per dollar spent is a lot less than drinking at home.  For poor people, they will get a bigger status boost out of these goods than I would, but I don't have the same need to stretch myself to less attainable luxury goods as they do for some reason.  I mean I could stretch my credit to the limit or take money out of my Roth IRA to get a Rolex right now, but if I have to stretch I don't want to.

I get more status value from net worth numbers than consumable items.  Because of easy credit you can't really tell if someone who sports a lot of luxury items is part of the upper crust or drowning in debt.  If credit markets tighten, will the low end aspirational luxury brands like Michael Kors and Coach regain their appeal? 

[Cowardly Toaster]

I read once that allied solders in German POW camps were starving themselves to death trading food for cigs. I feel it's related. A ciggie could allow you to escape from the POW camp for a minute. Could it be the same with poor folk? I think so.

The pressure to drive a nice car in the US is immense. I feel like a rebel for our 2004 Honda Element and 94 Mazda pickup (both unsexy but supremely practical vehicles, and PAID OFF). We get comments all the time.

[Cassie]

Our Toyota is a 2007 and our Honda a 2010 and no one ever says a word to us.  Both have very low miles because we semi-retired about 5 years ago so don't have to drive much. When one dies we will probably just have 1 car especially with ride sharing services around.

[aceyou]

This article kinda reminded me of a quote I heard/read, but don't know the source of:

"If you want to be successful, spend time with people who have more than you.  If you want to be happy, spend time with people who have less than you."

[WhiteTrashCash]

In my journal, I've talked about some of my own experiences with this sort of thing in the community where I grew up and what I've seen and heard matches what the article says. Poor people are taught that poverty is a personality flaw that shows they are inadequate human beings. So they waste money on stupid material possessions in a vain effort to prove that they are just as good as the middle class/upper class people. It's a very difficult mentality to break away from.

[Jrr85]

One thing I've noticed, I can not imagine myself looking poor.  I wear clothes from the salvation army one day and a tie the next.   I'm a white male computer programmer.  Even if I dressed as slobby as possible I don't think I could be read as poor.

Yea, you're definitely over estimating your privilege on this one.  Plenty of white males are read as poor/underclass.  It's definitely takes minimal effort to present at least an indeterminate status as a white male, but there are plenty of visible markers of the underclass that apply to white males also. 

[MrsPete]

I thought this piece from LSE was an interesting read:
http://blogs.lse.ac.uk/businessreview/2017/05/22/what-research-tells-us-about-the-avocado-toast-controversy/

My first, off-topic reaction to the article:  I absolutely ADORE avocado toast (though I've never had it at a restaurant -- why would I pay someone to make that for me?), but the toast in that picture is just nasty looking. 

Second thought:  My students.  My last-semester students really excelled in odd luxury-spending behaviors.  A couple examples:

- Two sisters who came in with super-fancy new hairdos and nails ... immediately after having missed a week of school because they were evicted from their apartment and were getting settled in the homeless shelter. 
- A girl who constantly missed school because she "had to work to help her family", yet when she did come to school she was always carrying a large Starbucks drink ... which she wasn't allowed to bring into the classroom.  I told her multiple times that if she was going to buy the drinks, she should leave home 10 minute earlier so she could actually finish them before class. 
- And the cell phones, oh, the cell phones.  100% of my senior students own a smart phone.  If their service is cut off, they still carry the phone, and they PRETEND to use it. 

You can also look at the powdered infant milk formula debate being marketed in developing countries. The issue is these countries do not have adequate access to clean water but such is the status pressure that poor mothers BUY formula because they want the best yet they could breastfeed their kids for free. As a result, the babies get sick because of dirty water. .

Was this a desire for status, or did they mistakenly believe the formula was better for their kids? 

I know that when I was born the doctor pushed my mother towards formula, saying it was the best for me ... but she literally couldn't afford it, so she didn't.  It wasn't a healthful choice on her part -- it was what was possible.  When she had my sister, the same doctor told her, "You wouldn't take my advice with the first one, but surely you're better off financially and can afford to give this child better." 

Yea, you're definitely over estimating your privilege on this one.  Plenty of white males are read as poor/underclass.  It's definitely takes minimal effort to present at least an indeterminate status as a white male, but there are plenty of visible markers of the underclass that apply to white males also.

I don't buy into all this "privilege" stuff, but -- yeah -- plenty of white males are visibly poor /underclass.  If you saw my cousin, you'd instantly recognize him as poor or working poor:

- His deep farmer's tan and super-short haircut are keys that he works outside -- a laborer.
- He wears jeans or khaki shorts and plain tees and always a ball cap; but his are clearly very old -- always wrinkly, sometimes with holes or stains. 
- He's missing a couple teeth.
- He smokes, and even if you don't see him smoking, he reeks. 
- His general health seems poor for his late-30s age.
- His grammar is poor, indicating that his education is lacking. 

On the other hand, if you saw my husband after he's been working in the yard, he might be dressed in the very same manner, but he doesn't come off the same way.  Even if you'd just me him, he'd give you the impression that he's a professional who -- for the moment -- is dressed poorly.  His mannerism and speech are eons ahead of my cousin's.