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Consumers Find Ways to Spend Less, Increase Happiness

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The most emailed and discussed article on the New York Times over the weekend was a piece about consumption versus happiness. The article kicks off with a look at a couple from Portland, OR who grew tired of the "work-spend treadmill" and decided to hop off. Three years ago they eliminated many of their belongings and downsized their home from a two-bedroom apartment to a 400-square-foot studio.

"The idea that you need to go bigger to be happy is false,” she says. “I really believe that the acquisition of material goods doesn’t bring about happiness.”

While the main thrust of the article is that the economy has forced many to reevaluate their spending habits ("Amid weak job and housing markets, consumers are saving more and spending less than they have in decades"), part of the way through an interesting turn occurs:

"“This actually is a topic that hasn’t been researched very much until recently,” says Elizabeth W. Dunn, an associate professor in the psychology department at the University of British Columbia, who is at the forefront of research on consumption and happiness. “There’s massive literature on income and happiness. It’s amazing how little there is on how to spend your money.”"

Indeed. While this is certainly true of the mainstream media, readers of Minyanville saw this coming five years ago. I believe this is a secular shift in consumer behavior, not a cyclical slowdown. The consequences of this ongoing secular shift will be felt throughout society, from the way we interact with family, to the types of experiences and entertainment we value.

In 2008, I discussed Socionomics and some effects we should anticipate in this social mood shift:

Why is it that a certain genre of film is popular at a certain point? Why is it that a certain dining experience, type of experience is popular at a certain point and then recedes later on? Well, that’s driven by social mood. It’s not that all of a sudden people decide, "I’m tired of these glitzy restaurants now, let’s scale down."

No, it’s social mood that determines those things. And one thing that I’ve noticed and I believe will continue to happen is that social mood will darken to the extent that any type of overt display of consumption, so-called "bling," any kind of gaudy display of wealth will be frowned upon.

There are always people who are out there going against the social mood trend. If you have a herd of animals, there are always going to be a couple of animals who are not joining the herd and are off doing their own thing. There are always people who are going to be doing their own thing. Don’t get me wrong.

But in the aggregate, there’s going to be less acceptance of that kind of display of wealth and consumption, the accumulation of things, living in bigger houses. We’ve seen all of these things begin to come together, downsizing in smaller houses, restaurants, you name it.
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