Affluenza and the new economy

With the national economy in free fall, many Americans have been jolted into facing an ugly reality about their spending. Despite the widespread availability of tax-advantaged savings vehicles like Roth IRAs and 401(k)s, statistics from the Bureau of Economic Analysis show that on the whole, we're not taking advantage of them. According to the BEA's statistics, the national savings rate ticked upwards to just under three percent in the second quarter of 2008, but that's almost the only time it's cracked one percent since 2005.

It's no wonder we're running scared now.

More people are struggling to get by than ever, and that's certainly a significant factor in the paucity of our national savings. More than that, however, I think we're just spending too damn much on stuff we don't need but think we have to have in order to be happy. There's even a name for for the conditions of debt, overconsumption, and anxiety all rolled up into one: it's called affluenza.

I think there are multiple contributing factors to overconsumption. They include having overconsumers as role models while growing up, never having learned how to budget, compensating for a lack of self-confidence, a disintegrating sense of community, excessive exposure to media advertising, and more. Even more disconcertingly, I think there's an unfortunate synergy between affluenza and its triggers: triggers lead to affluenza, but affluenza strengthens the impact of the triggers, leading to less self-worth and more keeping up with the Joneses over time.

There's a greater cost to affluenza than the hits it takes on bank accounts and sense of self-worth. Sustaining affluenza means spending more and more to acquire the latest and greatest of everything, which usually means more and more work to keep up with the spending as much as possible. There comes a point where the earn and spend cycle takes its toll both on physical health and emotional well-being. It also puts ever-greater strain on family life and natural resources. Finally, affluenza has has a warping effect on relationships and perspective. I think it was Judith Schor in The Overspent American who said that in the 1950's, people measured their material successes by comparing what they had to what their neighbors had. In a modern society with less of an overall sense of community and place in the neighborhood, people turn to television as their reference group.

Does watching Sex and the City reruns foster affluenza? Apparently, it does.

There are ways to lessen the impact of affluenza. Ones that work for me include:

Assessing my values
What's really important to me? When I spend money, is my spending in harmony with my values?

Shopping mindfully
Is what I'm buying a need or a want? If it's a want, will it contribute to my happiness in proportion to the resources I'm expending to get it?

Considering opportunity cost
What do I have to give up in order to buy what I want? Do those alternative choices accord more or less with my values than the choice I'm making now?

What's influencing my decision?
If there's something I want to buy, where did I learn about it? What sort of image associations do I have with this product, and where did they come from?

There's no defined process that works for everyone, but consuming mindfully generally leads to more responsible, better thought out choices than responding to affluenza.

In times of economic stress, that's a pretty empowering way to respond.