Consumer Culture

Back in Boulder, Zane (in "The Audacity of Hops"--there's a link in the
sidebar) argues that consumer debt in the United States is a result of a
consumer culture, not of any rational-choice process of weighing costs
and benefits.

I'm not sure I disagree with that, but aren't these two types of
approaches--viewing outcomes as primarily the result of some cognitive,
ideational, or socially-constructed process, and viewing outcomes
primarily as the result of a rational weighing of costs and
benefits--two sides of the same coin, and closely interrelated?

There are some desires that are innate to human behavior. For example,
if we're hungry, we can pretty much bet on the fact that we're going to
make rational choices to see that we get something to eat. By
extension, we can probably bet that we'll make a fairly rational
weighing of costs and benefits to decide whether to steal some bread to
feed our hungry kids.

I was in the market here the other day--in Quetzaltenango,
Guatemala--and I saw a skinny, mangey dog running out of the front
market door with a big old chunk of what appeared to be beef. It wasn't
a scrap--he had taken it from a butcher, somewhere inside, and he was
trying to get away with it without it being stolen, and without getting
kicked or hit with a stick by a butcher (or someone else). People don't
have any compunction about kicking stray dogs down here.

Even that dog had been involved in a little bit of rational-choice. His
equation:

(Benefit of eating beef)*(probability of actually getting the beef) -
(Cost of getting kicked)*(probability of getting kicked) > 0

Now, I have to admit that I didn't see the actual thievery. But I can
make a pretty good guess about how the deal went down, and it involved
the dog sneaking in behind the butcher's back, and going through a
process (probably instinctual) of evaluating, as he got closer, how the
probability of getting kicked was changing with where the butcher was
standing, and whether he saw the dog or not. In the end (unless the
steak got stolen by some other dog) the analysis seemed to pay off.

This is pretty basic stuff. But at higher levels of development (I mean
that in evolutionary terms, but also in terms of levels of economic
development) we get away from things that we can all agree we need or
want. I know that Zane's utility for having shiny technological toys is
less than his utility for having low (or probably no) debt. I, on the
other hand, have more utility for having the toys.

People in Guatemala often believe that you get a cold when the
temperature changes. I believe you get a cold when you touch a dirty
doorknob.

So, when you start to get sick, the Guatemalans tell you that you should
have bundled up. And I often wander around touching doorknobs with my
sleeve.

Both prescriptions are rational, given a pre-existing set of beliefs.

Both have supposed benefits (not getting sick), and costs (cost of
clothing, the cost of looking strange to the undergrads as you pull your
sleeve down around your hand to open the door). And we all weigh the
costs and benefits when we make our choices.

Neither one seems to work very well though--I seem to have come down
with a cold, as I type this.

I think that, in the case of consumer debt, we're looking at two things:
1. A culture of advertising that has increased the utility of having
the newest and best.
2. A culture that celebrates conspicuous consumption, providing real
utility for living beyond our means (though in a perverse sort of way)
3. A rational choice evaluation which tends to discount future debt.
4. A series of institutional incentives which make it possible to rack
up large amounts of debt without really harming our standard of living
much in the long run.

More broadly, I believe that culture creates a set of informal
institutions which shape our utility matrix--the costs and benefits of
our actions are determined, to a certain extent, by the values held by
others in society. I also think that culture helps us to form beliefs
which tell us what actions to take to pursue our rationally-developed
goals.

I think that both of these things are compatible with rational choice
analysis.