These new status behaviours are what one expert calls 'inconspicuous consumption'.
In Veblen's now famous treatise The Theory of the Leisure Class, he coined the phrase 'conspicuous consumption' to denote the way that material objects were paraded as indicators of social position and status. More than 100 years later, conspicuous consumption is still part of the contemporary capitalist landscape, and yet today, luxury goods are significantly more accessible than in Veblen's time. This deluge of accessible luxury is a function of the mass-production economy of the 20th century, the outsourcing of production to China, and the cultivation of emerging markets where labour and materials are cheap. At the same time, we've seen the arrival of a middle-class consumer market that demands more material goods at cheaper price points.
However, the democratisation of consumer goods has made them far less useful as a means of displaying status. In the face of rising social inequality, both the rich and the middle classes own fancy TVs and nice handbags. They both lease SUVs, take airplanes, and go on cruises. On the surface, the ostensible consumer objects favoured by these two groups no longer reside in two completely different universes.
Given that everyone can now buy designer handbags and new cars, the rich have taken to using much more tacit signifiers of their social position. Yes, oligarchs and the superrich still show off their wealth with yachts and Bentleys and gated mansions. But the dramatic changes in elite spending are driven by a well-to-do, educated elite, or what I call the 'aspirational class'. This new elite cements its status through prizing knowledge and building cultural capital, not to mention the spending habits that go with it – preferring to spend on services, education and human-capital investments over purely material goods. These new status behaviours are what I call 'inconspicuous consumption'. None of the consumer choices that the term covers are inherently obvious or ostensibly material but they are, without question, exclusionary.
The rise of the aspirational class and its consumer habits is perhaps most salient in the United States. The US Consumer Expenditure Survey data reveals that, since 2007, the country's top 1 per cent (people earning upwards of $300,000 per year) are spending significantly less on material goods, while middle-income groups (earning approximately $70,000 per year) are spending the same, and their trend is upward. Eschewing an overt materialism, the rich are investing significantly more in education, retirement and health – all of which are immaterial, yet cost many times more than any handbag a middle-income consumer might buy. The top 1 per cent now devote the greatest share of their expenditures to inconspicuous consumption, with education forming a significant portion of this spend (accounting for almost 6 per cent of top 1 per cent household expenditures, compared with just over 1 per cent of middle-income spending). In fact, top 1 per cent spending on education has increased 3.5 times since 1996, while middle-income spending on education has remained flat over the same time period.
The vast chasm between middle-income and top 1 per cent spending on education in the US is particularly concerning because, unlike material goods, education has become more and more expensive in recent decades. Thus, there is a greater need to devote financial resources to education to be able to afford it at all. According to Consumer Expenditure Survey data from 2003-2013, the price of college tuition increased 80 per cent, while the cost of women's apparel increased by just 6 per cent over the same period. Middle-class lack of investment in education doesn't suggest a lack of prioritising as much as it reveals that, for those in the 40th-60th quintiles, education is so cost-prohibitive it's almost not worth trying to save for.
While much inconspicuous consumption is extremely expensive, it shows itself through less expensive but equally pronounced signalling – from reading The Economist to buying pasture-raised eggs. Inconspicuous consumption in other words, has become a shorthand through which the new elite signal their cultural capital to one another. In lockstep with the invoice for private preschool comes the knowledge that one should pack the lunchbox with quinoa crackers and organic fruit. One might think these culinary practices are a commonplace example of modern-day motherhood, but one only needs to step outside the upper-middle-class bubbles of the coastal cities of the US to observe very different lunch-bag norms, consisting of processed snacks and practically no fruit. Similarly, while time in Los Angeles, San Francisco and New York City might make one think that every American mother breastfeeds her child for a year, national statistics report that only 27 per cent of mothers fulfil this American Academy of Pediatrics goal (in Alabama, that figure hovers at 11 per cent).
Knowing these seemingly inexpensive social norms is itself a rite of passage into today's aspirational class. And that rite is far from costless: The Economist subscription might set one back only $100, but the awareness to subscribe and be seen with it tucked in one's bag is likely the iterative result of spending time in elite social milieus and expensive educational institutions that prize this publication and discuss its contents.
Perhaps most importantly, the new investment in inconspicuous consumption reproduces privilege in a way that previous conspicuous consumption could not. Knowing which New Yorker articles to reference or what small talk to engage in at the local farmers' market enables and displays the acquisition of cultural capital, thereby providing entry into social networks that, in turn, help to pave the way to elite jobs, key social and professional contacts, and private schools. In short, inconspicuous consumption confers social mobility.
More profoundly, investment in education, healthcare and retirement has a notable impact on consumers' quality of life, and also on the future life chances of the next generation. Today's inconspicuous consumption is a far more pernicious form of status spending than the conspicuous consumption of Veblen's time. Inconspicuous consumption – whether breastfeeding or education – is a means to a better quality of life and improved social mobility for one's own children, whereas conspicuous consumption is merely an end in itself – simply ostentation. For today's aspirational class, inconspicuous consumption choices secure and preserve social status, even if they do not necessarily display it.
The Sum of Small Things: A Theory of the Aspirational Class by Elizabeth Currid-Halkett is out now through Princeton University Press.
How will the current challenges to the global economy pressure it to change?
- Life is different everywhere—it is determined by the context of a unique culture and a unique geography. The same goes for economies. Local economies are unique to their contexts, says John Fullerton, founder and president of Capital Institute.
- "[I]magine if you thought about human economic development from a place-based perspective," says Fullerton. "You would have, instead of a global corporation like Apple, thought of as a single thing, you would have Apple's manufacturing plant in China as part of the Chinese bioregional economy."
- The pressure on the current global economy will cause it to shift and evolve into a healthier state of community-based economic development.
Economics professor Stephen M. Miller shares his insights in this exclusive interview.
- Stephen M. Miller, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, gives insight into how the COVID-19 pandemic impacts American economies.
- Calling it a "trade-off between public health and economic health," Miller explains why social distancing is a necessary measure to avoid a total crash of economies.
- The SIR model, which is a guide to assessing how much of the population is actively infected, shows what could happen if the active cases of infection goes above 10% of the population.
COVID-19 and the American economy
Photo by Maderla on Shutterstock
From non-essential businesses closing down to people experiencing temporary loss of work - what will the economic impact of this pandemic be in the near and distant future?
Stephen M. Miller, director of the Center for Business and Economic-Research at the University of Nevada, Las Vegas, agreed to chat with Big Think to answer some of the most pressing questions about how pandemics such as COVID-19 can impact the American economy.
COVID-19 - the trade-off between public health and the health of the economy
"The COVID-19 event caused a trade-off between public health and economic health," explains Miller. "In order to protect public health, governors felt it necessary to lock down their state's economies by closing down non-essentials and asking residents to go home."
This lockdown, according to Miller, is considered an adoption of nationally social-distancing regulations which has seen an instantaneous recession. He goes on to explain the risk of bankruptcy many small businesses are facing:
"The exposure [to facing bankruptcy] that businesses face depends on the liquid reserves they hold that they can use to survive a large loss of revenue from declining business activity."
While there is no way to tell just how deeply small businesses will be impacted, it will likely involve many small business closures.
What is the trajectory of COVID-19's impact on the economy?
Miller says that the effect on the American economy depends on the length of the pandemic. The longer COVID-19 lingers, the deeper the impact on the economy will be and the longer it could take for businesses and residents to recover.
What can people do to help the economy during these difficult economic times?
"People can follow the guidance of public health officials on social distancing and staying at home to solve the pandemic problem. The federal government has a big role to play in building bridges across the time the pandemic shuts down the economy, bridges for workers and small businesses so that the economy can take off again after the pandemic ends."
Can past pandemics give us an idea of what to expect about the short and long-term repercussions of COVID-19 on the American economy?
"This event appears to conform to the characteristics of the Spanish Flu in 1918-1919," explains Miller, "[That] pandemic killed 675,000 individuals in the US (0.8% of the 1910 population). Given today's population of 331 million, that translates into about 2.6 million deaths."
Miller further explains that our healthcare system and the structures in place to re-balance the American economy are much improved since the 1900s – however, our much-improved geographic mobility makes the transmission of a pandemic more problematic than it was in the past.
The SIR model
How can we estimate the damage caused to our economy from COVID-19?
Image by Ascannio on Shutterstock
The SIR model is a guide to assessing the spread of an epidemic in a population in which the total population is divided into three categories:
- Susceptible (S)
- Actively Infected (I)
- Recovered/Deceased (R)
How an epidemic pans out vastly depends on the transition rates between these three categories. According to recently published working paperecently published working paper by UCLA professor Andrew Atkeson, special attention will need to be given if the fraction of active infections throughout the population exceeds 1%. At this point, the health system forecast will be severely challenged.
Trajectory shows that if the fraction of active infections were to reach 10% or higher, this would result in staffing shortages for key financial and economic infrastructure, which could have devastating results.
The main conclusion of this paper is that the evolution of COVID-19 in the United States (and worldwide) will likely require social distancing measures to be maintained for an entire year or longer until a vaccine can be developed to avoid severe public health and economic consequences.
The economic costs of social distancing will be felt deeply across every state's economy as businesses close and employees are instructed to stay home, but the cost of a large cumulative burden of lost work time due to the disease further spreading could be much higher.
From understanding human aggression to epigenetics, Stanford University offers all 25 lessons of this fascinating course for free on YouTube.
- Stanford's Human Behavioral Biology course explores the interconnections between physiology and behavior.
- Most of the course is taught by Robert M. Sapolsky, a professor of biology, neurology, and neurosciences at Stanford, and also an author and contributor to Big Think.
- Check out some highlights from the course below.
Imagine a 40-year-old man in the U.S. who is leading a quiet, suburban life. He's been married 15 years and has two kids and two pets. One day at the office, a coworker says something about a baseball team, and our man takes exception. He punches his coworker in the face. This, according to everyone in the man's life, was unusual behavior. Then, three months later, his wife discovers he's been having an affair with a much younger woman. Finally, he absconds with thousands of dollars that he embezzled from his company, and his family never sees him again.
How could you explain what happened? A few possible options:
- He's a bonafide creep.
- He's going through a very immature mid-life crisis.
- He has a rare mutation in one gene in his brain.
This scenario is posed at the start of Stanford University's Human Behavioral Biology course, available for free on YouTube. The course is led by Robert M. Sapolsky, a professor of biology, neurology, and neurosciences at Stanford, and also an author and contributor to Big Think. Sapolsky notes that the behavior described above is exactly what you'd expect in somebody with a rare neurological disease caused by one genetic mutation.
Over 25 lessons, most of which clock in at around 90 minutes, the college course explores how physiology and behavior interact — or, how our thoughts, emotions, and memories can influence seemingly unrelated bodily processes, and vice versa. The entire course is available on this playlist, but listed below are a few highlights to get you started.
The limits of categorical thinking
In the first lesson of the course, Sapolsky quickly reads a bunch of phone numbers, and instructs the students to write down as many as possible. For the first few examples, Sapolsky breaks up the phone numbers into the familiar "123-4567" pattern of which we're accustomed. He then starts reading them in unusual patterns — "1-23-456-7" — in an attempt to confuse and disrupt categorical thinking patterns.
Sapolsky says that categorical thinking helps us make sense of the world and store information more easily. But he uses this example to get the class thinking about how paying too much attention to the boundaries in categorical thinking can cause you to lose sight of the big picture. (Sapolsky elaborates at 16:45 in the video.)
The "worst urban myth of evolution"
In the first lesson on behavioral evolution, Sapolsky introduces the class to applying Darwinian principles of evolution to behavior.
"The first thing we need to do is unlearn something we all learned back when, on all those National Geographic specials that would consistently teach us something about this aspect of evolution, and would always teach it to us wrong."
Another scenario: A herd of 2 million wildebeest is migrating toward greener pastures. The herd eventually comes to a river. It's teeming with crocodiles. The wildebeest stop. Then, one elderly wildebeest steps up to the riverbank, jumps into the water, and gets eaten by the crocodiles, creating an opportunity for the rest of the herd to safely cross.
Was this a heroic sacrifice? Sapolsky says that popular science programs like National Geographic have long claimed that animals tend to "behave for the good of the species," an idea described by group selection. But this is the "worst urban myth of evolution," he says.
If you look closely at the wildebeest scenario, you'd see something decidedly less heroic, the professor says: the herd is actually pushing the elderly wildebeest up to the front of the line. "All of the other ones are saying, 'Yeah, get the old guy on the river!' Sacrificing himself, my ass."
"Animals behave in order to maximize the number of copies of genes they leave in the next generation," Sapolsky continues. "Remember: not survival of the fittest, reproduction of the fittest."
What to ask about any scientific study
In 2007, scientists published a major study showing that first-borns tend to have higher IQs than their siblings. The researchers controlled for nearly everything you might think of: differences in parental investment, parents who only have one child, age of the children when tested, etc. Media outlets ran with study, but lost in much of the coverage was a simple question: How big of a difference did the study find? The answer: 2.3 points.
"You sneeze while you're taking an IQ test and have to wipe your nose for eight seconds afterward, and that's going to cost you 2.3 IQ points," Sapolsky says.
The study was a great example of how the results of a study can be impeccable and statistically reliable, and also unimportant. At the 9:30 mark in the 8th lesson, Sapolsky uses a "Chutes and Ladders" experiment to illustrate how to better interpret the results and methodology of scientific experiments.
Near the end of the course's first lesson on behavioral genetics, Sapolsky discusses how early experiences can shape long-lasting behavioral dispositions. These dispositions might appear to be genetically inherited. But Sapolsky notes that epigenetic research on rats shows that environmental factors — like mothering style — can influence how likely a pup is to express certain genes. Such genes might be responsible, say, for making receptors for stress hormones.
"Your early experience is going to cause life-long changes in your brain, which will make you more likely to reproduce the same experience for your offspring," Sapolsky says around 135:15 in the video below.
What's especially interesting is that this kind of epigenetic programming is reversible. Noting research conducted by Michael Meaney at McGill University's Douglas Research Centre, Sapolsky says:
"You have a baby rat who spends the first of its infancy with some totally terrible, negligent, distracted mom," but if you put that pup with a nurturing mom, "you can change the epigenetic pattern."
Sapolsky notes how this kind of epigenetic programming looks and operates similar to genetics.
"All of this has two themes has two themes going on: Early experience causing really persistent differences in how this stuff works long after, and experience later on having the potential to reverse some of this. All of this stuff, once again, [could be] mistaken for genetic. What we have here is what appears to be a genetic style of what sort of mother rat you are, and it's not genes, it's the mothering style setting up the offspring for being a similar type of mother."
To be sure, epigenetics is a complex field, and this is just a simple example of how the environment can influence gene expression. Throughout the entire course, Sapolsky routinely emphasizes that studying human behavior, or any scientific field, can be incredibly complex — so much so that it may seem like it's impossible to solve anything. But "even though it's complicated, you gotta do something," Sapolsky says.
Part of studying a complicated field requires accepting the limitations of your era, as Sapolsky describes with an analogy about archaeology:
"A wonderful cool thing I heard about in archaeology...[is that] when you excavate a site, what you're supposed to do is excavate about half of it," he says. "You leave the other half for people in the future, with better techniques and better understanding, and leave something in tact there to keep from your, sort of, blundering hands."
The course ends on a message about the assumed dichotomy between being compassionate and being scientific: "Go and do both," Sapolsky says.
When facing a tough decision, it pays to trust your gut.
- A recent study examined the accuracy of predictions of soccer matches on a popular betting website.
- The users were allowed to revise their bets up until the match started.
- Surprisingly, the results revealed that the revised bets were much more likely to be incorrect.
Imagine you were asked to predict the score of an upcoming match between your favorite sports team and its rival. Now, imagine you were allowed to revise your prediction at any time before the match. Would it do you any good?
Probably not. A new study suggests that it's better to trust your gut and stick to your original prediction. Published in the Journal of Behavioral and Experimental Economics, the study examined the accuracy of predictions made by 150 users of a popular sports betting website. In total, these users made 57,000 predictions on the final scores of soccer matches in the English Premier League during the 2017-2018 season.
Users were allowed to revise their predictions anytime before the match. But that was rare: The average user only revised about 15 out of 380 predictions, and the majority of these revisions were typically made minutes before the match began, possibly after learning new information that might affect the outcome. Some revisions were made weeks or months before the match, but ultimately, the average time between the first and final predictions was two days.
Why did users change their minds?
"We can only speculate, but we might imagine that game players input their initial forecast, following which they look at the latest online betting odds on the match, or look for other information which might affect their judgement, such as news on team selection for the match," the researchers wrote. "Alternatively, these revisions could simply be the result of changes to initial judgements without any new information."
You might think the ability to revise your prediction would be an advantage. After all, maybe you had more time to carefully consider which team is more likely to win. Maybe public opinion on the two teams had shifted over time. Or maybe one of the teams had recently begun an incredible winning streak.
But the results of the study showed that prediction accuracy decreased significantly — by about 17 percent — when users revised their original predictions. Why? Given that the study controlled for variations by players and teams, it's unlikely that the drop-off in accuracy was due to some matches being harder to predict than others, or some users being better predictors than others.
One possible explanation is a behavioral bias that describes how people are likely to overreact to news that is salient. So, when you learn, for instance, that a player on one of the teams was injured, you might respond excessively to that news, leading you to revise your original prediction.
The results revealed that revisions made after a longer period of time, as opposed to just a few minutes, were much less likely to be correct. Also, users were less likely to predict correctly when their revised predictions included higher scores, for example, changing a 1-2 outcome to a 2-3 outcome. Interestingly, most users underestimated the likelihood of a 0-0 draw. Broadly, this suggests that we tend to falsely believe it's more likely for something to happen than nothing.
Trust your gut
The researchers wrote that their findings "could have relevance to other contexts where judgmental forecasting explicitly takes place and which have real economic importance, such as in company management and planning, financial markets and macroeconomic policy."
Of course, sometimes new information should cause us to revise our decisions. But for situations where new information is unlikely to significantly alter the outcome, the results suggest it's best to make a decision and stick with it.
This aligns with research from Stanford professor Baba Shiv, an expert in the neuroscience of decision-making. Shiv's research found that, even though we often face tough trade-offs when making complex and emotional decisions, a key component of successful decisions is staying committed to our choice. Shiv told Stanford Business magazine: "When you feel a trade-off conflict, it just behooves you to focus on your gut."