Happiness and consumption

When we first hear the headline “Happiness and Consumption”, the first thing we think of is the discussion whether consumption leads to happiness or not. There are several approaches to this question and we will deepen our analysis in some of the most representative ones. In any case, the issue about “Happiness and Consumption” could be understood the other way round: does happiness lead to consumption? This approach, although not evident, might be plausible, as well.

Seek of happiness is a relative recent concept; what is happiness? The first approach to this question might be satisfying Maslow’s pyramid of needs (of course, each individual is in a different level in each period of his/ her life). Coming to our point, mankind has always tried to achieve the levels and in the order explained by Maslow, but nowadays we need much more complex achievements to be content with the degree we perform in each level of the pyramid. Performing well in every level has become a more difficult duty, and this is the point where consumption steps in. We try to satisfy our needs with material things, which is linked to the materialistic culture of Western society, which is also spreading to the industrializing countries. There are several detractors of this view and we are going to analyze them as well.

MICROECONOMIC VIEW

We start with the most classical economic view of “happiness”:The microeconomic view of utility and goods is a consequence of the Western view of happiness.

Economics explains consumer behaviour and its seek of happiness in terms of utility, which is thought to be a positive function of the level of consumption of goods and services. In other words, the more an individual consumes, the happier he/she is.

When economists expose this theory, they portray a consumer that chooses between consumption of two goods, between consumption and leisure, and between consumption at different time periods. The consumer tries to maximize his/her utility depending on his/her prior needs. As it may become clear at this point, the needs are covered by material things. In fact, several authors define the entire subject of economics to examine how limited resources are allocated in alternative ways to satisfy human wants. According to them, the goal of economic activity is to achieve efficiency, which is usually to maximize the production of goods and services.

Consequently, consumption is seen as the driving force of the economy, providing people with the incentive to expend their time and energy to obtain more and better things.

OTHER ECONOMIC VIEWS

Referring to other economic views, as a brief introduction, we could compare the levels of happiness between different periods of history in which income levels vary considerably. For instance, income in the United States has risen a lot since the end of the Second World War and yet, the proportion of US population that assures to be happy remains more or less the same. More generally, time series data in individual countries that have experienced significant increases in income and consumption do not lead to significant increases in their level of happiness over time (the same applies to individuals, not only whole countries). Analyzing levels of self-reported happiness among different countries in the same period of time, we also get the same results: those that evidence higher levels of per capita income and consumption do not report to have a higher level of happiness beyond a certain level of income. Some authors show empirical proof for this, such as Deiner and Shigehiro, Frey and Stutzer, Andrew Oswald and Easterlin (who created the “Easterlin paradox”).

There are some possible explanations for this; first, human beings look over their shoulder all the time to compare what they own with what others own. They are on a “hedonic treadmill”; once basic needs are satisfied, humans care rather about relative than about absolute levels of income.

To expose the second explanation we draw back to the microeconomic view; utility grows when income does so, but each additional increase of utility is smaller than the previous one. In other words, marginal utility is decreasing. After a certain level of income, utility does not increase anymore (actually, according to the microeconomic theory, it may even decrease). Some studies suggest that in the short term people are happier – even if temporarily – but then their happiness level diminishes again.

Friedman and Savage propose that there are indeed some income increases that lead to increasing marginal utility; according to microeconomic theory, people are enemies of risk and therefore no one should have any incentives to take part in a lottery game. As lottery proves to be very popular in a lot of countries, Friedman and Savage conclude that marginal utility is increasing with respect to very high income growths that can change one’s life.

In any case, this is a very special case and we focus on the idea that happiness cannot be measured through income.

There are some authors in favour of the existence of a strong link between happiness and consumption, such as Frijters, Haisken-DeNew and Shields (2004), who analyzed the changes in happiness of East Germans after the transition from communism. However, their findings seem not to take into account other socioeconomic changes that took place due to the transition.

MEASUREMENT OF HAPPINESS

What if we cannot measure happiness through GDP anymore? The solution proposed by many economists is the introduction of GHL (gross happiness level). Jigme Singye Wangchuck, Buthan’s King in 1972, invented the term Gross National Happiness (GNH) to substitute GDP in order to measure quality of life and social progress in a more holistic way, introducing aspects that GDP did not contain. This approach is based on the Buddhist mentality, which states that beneficial development of human society takes place when development is not only material but also spiritual. Buddhism relies on four pillars and GHL divides these four pillars in eight categories: time-balance, social and community vitality, cultural vitality, education, living standards, good governance and ecological vitality. Bhutan proves to be a “happy country” but this is highly affected by their concept of happiness they have: Buddhist economics proposes alternative principles such as minimizing suffering, simplifying desires, nonviolence, genuine care, and generosity. Buddhists do not expect to achieve great things to be happy, but they are content when minimizing suffering. In this sense, we could quote Fontenelle`s words: “expecting too high happiness is an obstacle to be happy”.

DIFFERENCE BETWEEN CONSUMPTION AND PURCHASE

One thing is not completely clear in this definition: according to what has been discussed up to this point, the question is whether we should rely on income to seek happiness, but actually income is not exactly consumption. However, we dedicated this space to talk about income and not directly about consumption because the level of consumption is usually proportionate to income. One could go a bit further and add that consumption does not necessarily imply buying things. It only implies that goods and services, independently from where they come from, are a source of happiness but we could get them by other means, such as creating them by ourselves, but we will not explain this kind of consumption in greater depth as we prefer to concentrate on consumption of purchased things, which can be expanded on consumption of ideas, lifestyles, etc.

RELIGION AND CONSUMPTION

Coming directly to the point of consumption, we could continue the path that we started when talking about Buddhism; the view of religions towards consumption is usually against materialism and in favour of strictly buying what we need (by the way, what we need and what we do not is another interesting issue). From the religious point-of-view, religions are supposed to give meaning to life and, in this sense, the purpose of consumption should just be to provide safety, food, shelter, etc. but in recent times consumption is competing with religions; the “religion of consumption” is being created. According to “Young and Rubicam”, one of the most prestigious communication agencies in the world, brands are now a new religion; people rely on them seeking the meaning of life. The agency compares itself with the missionaries who spread religions all over the world. The general opinion of religions is that they, just like brands, are based on powerful ideas, but whereas religions do provide a meaning to life, products just create the false sensation that we are more valuable in the eyes of others. Materialism is a disease of low self-esteem. Saint Francis of Assisi or Gandhi did not own superfluous objects that distracted their attention from the others and from God.

And so we come to the question already suggested above: does consumption lead to happiness?

All successful brands convince consumers about the fact that they –the brands- are able to satisfy the consumer’s needs. If satisfying needs is creating happiness, brands make consumers happier. The problem comes when brands keep creating new wants in consumers so that these have the impression that they never fulfill their needs completely. First, consumers need to believe that consumption will satisfy their needs and secondly, their expectations about happiness must never be achieved because they have to keep growing or changing. And in this case consumption will not lead to happiness.

SUSTAINABLE CONSUMPTION

The ideal kind of consumption would be sustainable consumption: substantial reduction of consumption (to avoid depletion of resources and to leave room for those who do not have much money), eco-friendly consumption and tradition-friendly consumption when it is a suitable option (small farmers, homemade products…).

Focusing on the problem of waste of resources, there comes a point where using more resources actually reduces your quality of life (and quality of life is connected to happiness). This can be seen on this graph; in this view, we do not only compare “income” with happiness, but we also include the effort to get this income, but this is usually like that in real life.

When you use a lot of resources and you spend a lot of money and effort on something, you eventually end up feeling overwhelmed; your mind and your life are crowded. The more you have and the more you do, the worse you feel. If you start using fewer resources, you find yourself with more free time, eating more healthily. There is a point in the middle called the point of habituation where you do not feel happier with more achievements. The goal is being exactly in the point where you are really conscious of what you use, you do not take things for granted and you understand that your actions have consequences for other people and the planet. It is the point between asceticism and waste, between self-denial and self-indulgence and it is similar to the view that religions have about consumption (only that religions do not refer directly to eco-friendly consumption).

The materialistic view thinks the following about those characteristics:

– Happier with more consumption

Happiness is commonly associated with a high material standard of living and many purchases are driven by the expectation that they will make life more satisfying, especially the purchase of durable consumption good and the spending of money on holidays.

– Not happier with eco-friendly consumption

Consumers are optimistic and think that technology will solve the problem of resources depletion.

– Not happier with tradition-friendly consumption

The fact that these products tend to become obsolete (sometimes due to planned obsolescence) is seen to convey that modern products are more attractive.

BRANDS AND HAPPINESS

So in the previous section we come to the conclusion that there is a point where we cannot be happier anymore through consumption. Let us imagine that we are not at this point yet. We start with a practical example:

In this case, Apple is not just selling a mobile phone, which is used to communicate with others (practical use); Apple is selling identification with a brand that target consumers value a lot (Maslow’s self-esteem level), belonging to a group of latest technology-owners (belonging level), being unique because of having a very special device (self-actualization/ self-esteem)… In this sense, the IPhone is satisfying needs that the consumers wants to satisfy in order to be happier. This needs could be satisfied by means that would not require any money, but here Apple has managed to offer something which consumers have to pay for and which Apple profits from. Whether this is ethical or not is another issue (some people could think so, but this is not the issue in this essay).

The question is whether the brand satisfies the need completely or it keeps stimulating wants in the consumers so that they always desire new products. This is the case for example of planned obsolescence. Planned obsolescence is deliberately planning or designing a product with a limited useful life, so that it becomes obsolete or nonfunctional after a certain period of time. Planned obsolescence has potential benefits for a producer because the consumer is under pressure to purchase again. Products produced this way have not necessarily designed to fail technically; “fail” can simply become obsolete because they are not fashionable anymore. Examples of this can be:

– The creation of new IPhone models every year with new applications that Apple consumers do not want to miss.

– Fashion in clothes every new season (bell-bottoms are not used anymore and some years ago they were the last word in fashion)

– Printers designed to print a specific number of pages and high reparation costs if the consumer wants to repair it instead of buying a new one

– IPhone battery designed to last very little

– Printing cartridges that stop being produced or that have a slightly different shape from the cartridges used in new models of printers of the brand; the printer may work perfectly, but it has no suitable cartridges

COMMUNICATION OF BENEFITS

Coming back to the personality of the brand, to make consumers identify more with them, brands try to communicate their positioning and the benefits belonging to it in their communication campaigns. Advertisers rely on topics such as happiness, youth, success, status, luxury, fashion, beauty, etc. In advertising, social contradictions and class differences are hidden and workplace conflicts that may take place in the enterprise are not shown. Advertising campaigns suggest that solutions to human problems are to be found in individual consumption, presented as an ideal outlet for mass energies.

This again makes us wonder whether the target population is really happy buying these products because the can only be really happy if they buy something when it is them who decide to buy it. This does not necessarily mean that they are not manipulated; advertising can manipulate them and then it is them who decide that they want to buy what the advertisement shows. Manipulating, in any case, can be interpreted as creating wants from existing needs.

In this sense, brands often refer in their communication campaigns to the freedom of the consumer to buy whatever he wants… by buying the product of that brand. Although it is quite paradoxical, this also contributes to the happiness of the consumer. One example:

CONSUMPTION OF IDEAS

Ideas can be consumed, as well. Brands, political parties, religions, friends, etc. surround us with ideas that forge our mentality. Actually, in the era of materialism, we are overloaded by physical products and by services and brands are not interested anymore in selling such products and services referring to their functional features; a car is not a vehicle to drive to work anymore. It is a life as a successful businessman. The ideas that products are services appeal to have already been explained in greater depth in previous sections. The interesting part here is how political mentalities or religious beliefs can be consumed as a way to obtain happiness. When you choose a certain political party or you decide whether to have religious beliefs or not, you are choosing in some way a specific lifestyle that implies a specific culture, a specific social circle, etc. and this again is a way to achieve what we consider a happy life.

DOES HAPPINESS LEAD TO CONSUMPTION?

As we already explained in the beginning of this essay, the most obvious reaction to the title “Happiness and consumption” is to think whether consumption leads to happiness, but another approach would be to wonder whether consumption can be the result of happiness as well. When we are happier, we are in the mood to do more things that please us and one of them may be consuming, just like in the example of L’Oréal’s claim “because I’m worth it”. We have the energy to afford whims we wish and our bodies provoke the chemical reaction that makes us more creative, which eventually leads to consumption to express this creativity; for example, we may have much more ideas to combine different clothes.

SUMMARY AND CONCLUSIONS

The final objective of consumption seems to be happiness, but there is a point in our level of consumption from which utility does not seem to grow anymore and Western countries have reached this point by far-actually, there are some cases where utility may decrease with an overwhelming level of consumption. Increases of happiness occur only in the short term and then consumers return to their “standard” maximum level of happiness. What companies now do continuously is creating wants from pre-existing needs in order to make consumers desire this short term happiness.

Anyway, what we call happiness varies among different mentalities and so we could take the example of religions. Most religions argue that consumption just leads to false illusions and, focusing on Buddhism, its concept of happiness makes in no way possible that consumption of products and services lead to it.