One Life: The Cost of Extreme Consumerism

When the doors opened early for Black Friday sales at a Wal-Mart store on Long Island, the frenzied shoppers stormed in, determined to be the first to grab the bargains before they were depleted. The maniacs trampled the unfortunate Wal-Mart worker whose job was to open the door. The shoppers continued to run in, ignoring the man on the ground. The New York Times described the scene:

The throng of Wal-Mart shoppers had been building all night, filling sidewalks and stretching across a vast parking lot at the Green Acres Mall in Valley Stream, N.Y. At 3:30 a.m., the Nassau County police had to be called in for crowd control, and an officer with a bullhorn pleaded for order…
By 4:55, with no police officers in sight, the crowd of more than 2,000 had become a rabble, and could be held back no longer. Fists banged and shoulders pressed on the sliding-glass double doors, which bowed in with the weight of the assault. Six to 10 workers inside tried to push back, but it was hopeless. Suddenly, witnesses and the police said, the doors shattered, and the shrieking mob surged through in a blind rush for holiday bargains.

At this point, Jdimytai Damour was trampled in the stampede and died, without shoppers stopping to help. When the police shut down the store, shoppers refused to leave.

Is shopping, while possibly saving a few dollars on a highly-publicized sale day, so important that it forces otherwise normal people to act like savages, literally killing each other to be first in line for the bargains? It sounds like this Wal-Mart location was inadequately protected with security appropriate for a mob scene, but it’s just a sale. This was not an angry mob, marching for a cause, ready to defend their movement to the death. Those who trampled this poor individual without any thought to his well-being should be arrested and charges with second degree manslaughter.

One Black Friday Tip to Rule Them All: Buy Nothing

For those in the United States, tradition and media influence have established today as a day for spending time with family, over-eating, and watching television. What could be more American than Thanksgiving Day?

Fast becoming a tradition for consumers is Black Friday (and to a lesser extent Cyber Monday). Retailers have discovered a tendency to for consumers to use the day after Thanksgiving as the perfect time to finish shopping for the holidays. With this observation, the stores compete with each other to grab shoppers’ attention with the goal of having customers depart with as much as their own cash as possible.

Tips for saving money on this holiest of holy consumer days are plentiful. Boiling own the most typical advice, consumers should pay attention, prepare with as much information as possible, stay focused, and get out or online early. For more solid tips for shoppers who are determined to spend money, take a look at The Insider’s Guide to Black Friday Bargains, an article I wrote for PC World.

But even the best advice ensures that you will spend more money. Retailers are happy with bargain hunters because they will spend more in the long run.

There are two paths for the informed citizen:

Path 1: Accept you are one small piece of a larger economy and admit that despite finding bargains, you will spend more money this holiday season than you probably should.

Path 2: Resist the desire to spend spurred by society and spend nothing.

Buy Nothing Day is the anti-consumerist “holiday” promoted by Adbusters. While it is “celebrated” on the Friday following Thanksgiving Day, the movement encourages focus on a larger issue than fighting against retailers who market to us 24 hours a day.

In a consumption-based society, we are draining the planet of its natural resources. Simply refusing to take part in Black Friday festivities will have little effect on the companies or the world. Buy Nothing Day should offer us a chance to look at the relationship humans have with the planet and look for room for improvement.

Use this winter, with the economy deteriorating and leaving many people with less money to spend anyway, as a chance to re-evaluate the way you celebrate the holiday season. Rather than buying CDs and DVDs, plastic toys, and electronics, all which will sit in landfills for thousands of years before breaking down after their usable life has ended and sometimes contain dangerous chemicals, discover new ways to share your love with family and friends.

One tip outweighs all others for Black Friday and the holiday shopping season at large: buy less. Buy intelligently and find your bargains, but use this year as an opportunity to rethink the way you approach holidays sponsored by retailers.

While you’re at the dinner table with your family today, use the friendly atmosphere to discuss whether a new approach to the gift-giving season could apply to your holiday experience.

Read more:

Photo credit: Hey Paul

The Battle Royale: You Versus Yourself

About the author: Matt Wallaert is a behavioral psychologist and the Lead Scientist at Thrive, a free financial advisory website that helps people organize their finances and plan for the future with personalized feedback from its behavioral advisory engine. Twenty six and addicted to buying suits at Goodwill and geeking out on psychology, he lives in New York City’s Chinatown and pretends he is back in Hong Kong.

There are days when being a behavioral psychologist is utterly depressing. You think you’re smart, you think you’ve got it figured out, then you fall into the same traps that you warn other people about. Take, for example, my recent candy incident.

Our CEO really loves a particular type of gum, and in order to get him a batch, I went online to a candy warehouse. They had free shipping above $50, so naturally, I loaded up my cart with enough processed sugar to satisfy an army of third-graders and checked out.

The problem is that, since I study the tricks that marketers use to get you to buy more, I already know exactly how that $50 limit works. Shipping goes into a different mental bucket than the rest of the purchase, so getting it for free means paying one “cost” instead of two. Hence my loading up the cart.

Yet for all my understanding, I still bought the candy. Knowing it was stupid, feeling foolish, I still did it. And this isn’t an experience that is unique to people who study these things. I suspect that many well-educated consumers that read blogs great blogs like Consumerism Commentary fall prey to exactly the same tricks, even if they “know” about them. We are literally struggling with our own natural tendencies, the same tendencies that marketers exploit to get us to buy their products.

The struggle, then, becomes about both knowing and doing. As you head into the holidays and particularly Black Friday, when every marketer in the country turns their brain on overdrive, it is worth thinking about bridging that gap by using the same tools they do to trick your brain.

Take loss leaders: products that stores sell at cost or at a loss in order to get you in the door. Black Friday is filled with 6am deals designed to do just that. They know that once you’re in the store, you’ll buy more than just the LCD TV; you’ll also buy movies and stands and cables and a plethora of other items that will jack up your credit card balances. They count on the fact that you’ll spend more on other items, which makes up for the loss they take on the TV.

But you can play hardball too, using what we know about behavioral psychology to change the playing field. If the store counts on you spending more than you plan to, what if you simply leave your wallet at home? Bring only enough cash to get the item that they so nicely advertised for you, displaying the price in advance. Figure out the tax, take it in cash, leave with what you want and nothing else.

With only just enough cash, you can’t possibly walk away with something more expensive without going out to the car and driving home. And studies suggest that once you break that cycle of buying, introduce the time for reflection and thought as you go off in search of your credit card, you’re more likely to stay home with your new TV than drive back for additional merchandise you don’t need.

Stores also use these loss leading ads to lure you in with limited quantities: once they are sold out, retailers pay nothing to get you in the door. And research suggests that since you came planning to buy a TV, you’ll probably walk away with one, even if it is a more expensive version. You don’t want to waste the trip, you’re in the buying mood, and you’ve already come to view the TV you plan to buy as “yours”. So when they don’t have it, you’re left with this void to fill. A TV-sized void, and one they’d be happy to fill with another TV that is marked up and helps them make a profit.

One way to avoid this upsell is to think of the item you’re buying as specific, not just “any TV”. You can do this by pre-committing to the item. Try writing the model number or name of the specific item on the cash you plan to use, so that the money becomes tied with that purchase and isn’t transferred to another, similar item. It may feel ridiculous, but the goal here is to fight psychology with psychology: if they’re going to make you feel like you already own an item they can’t sell you, why not refuse to buy anything but that item?

You can even make them work for the sale. Stores do their best to make you stop as often as possible in the store, because every time you stop, you are exposed to new products. That’s why the space between items is so narrow: not only can they pack in more products, but two people can’t walk down the aisle at the same time. So fight back, by finding a salesperson as soon as you get in the door and asking them to take you to the item you’re looking for. Salespeople are motivated to move fast, so they’ll walk you there briskly by the shortest route and you’ll be too busy following them to start browsing around the impulse buys.

You can actually do the same thing on the way back. Inspect the item, confirm that you want it, then ask the salesperson if they can check you out. They’ll usually tell you to meet them at a register and point, so you can walk right over with them and avoid the hazards of a return trip through the store. This is particularly important because stores like to put the sale items at the back, where you have to walk through the entire store to get to them.

The key to all this, as I alluded to in the beginning of the post, is actually doing it. It is easy to read these articles and think tips are great, but never actually put them into practice. Write it down, make a plan, and tell someone what it is: public commitments may us more likely to follow through and putting effort into something makes us more likely to deliver. And of course, we know that behaviors are habit forming. What feels unnatural at the beginning gets easier with time, until with practice it becomes second-nature.

Psychologists spent a great deal of time frustrated by the fact that we can show people what they need to do to get what they want, and they still don’t manage to do it. Imagine how frustrating it is when we make the same mistakes! So make this poor researcher’s holiday and actually do what you know: save money. Avoid the pitfalls. Fight back. After all, it is your brain.

Photo credits: rochelle, et. al., valderrama

If you enjoyed this article, please visit Thrive and Thrive’s blog, Good to Grow. You can also subscribe to the blog’s RSS feed. We would appreciate your comments and reactions, so if you would like to contribute to the discussion, add your comment below.

News and Blogs: Wednesday, November 19, 2008

5 Money Mistakes in a Bad Economy. Here are the mistakes: continuing to use credit cards, withdrawing or taking a loan from your retirement funds, paying for college without loans, grants, or scholarships, neglecting to invest, and taking home-equity loans.

Bid to Ban Sale of Obama Tickets. Tickets to presidential inaugurations have always been free, but demand for the ability to attend Barack Obama’s ceremony early next year is so high that people are willing to pay tens of thousands of dollars for the opportunity to go. Congress is working to make the sale of these tickets illegal and to penalize those who attempt sell the tickets with a $100,000 fee or a year in jail. Those who live in the Washington, D.C. area stand to make more money by offering their homes and backyards to visitors in exchange for a rental fee.

Consumer Prices Fall Record 1% as Energy Plunges. Thanks to the sharp decline in gas prices, the overall CPI dropped the more in one month than it has since the data were recorded. That’s good news in the short term, resulting in lower expenses for consumers, but could be a problem for businesses when profit margins are already thin.

Last Minute Gift Ideas and Shopping Tips For Holiday Procrastinators. I find myself running around at the last minute as the holidays draw near. Here are some ideas for gifts for those people for whom you might not know how or what to buy. I would stay away from gift cards this year. There’s always a chance your favorite store could have a hard time this year. In the past, stores that enter bankruptcy have not always accepted gift cards.

Vanguard’s New Self-Employed 401(k) Plan – Roth Option Included. Here is a superficial review of this new offering from Vanguard. If I ever give up new contributions to my company 401(k) by leaving the corporate workforce, I’ll be taking advantage of this offering. This is worth more research when the time is right.

For the “News and Blogs” features, which I plan to run almost daily as long as I have additional articles to share, I select some of the most interesting posts from my RSS reader and from pfblogs.org. If you don’t believe you blog is included on my RSS reader, please let me know to so I can add it. Thanks!

News and Blogs: Tuesday, November 18, 2008

I’ve added more $25 bonus codes for new ING Direct customers last night. If you have at least $250 to deposit into a high-yield savings account, use one of these codes to receive a small boost.

You’d Better Watch Out: Gift Cards Can Be Lumps of Coal. If you are considering getting someone a gift card this year, opt for cash instead. Businesses that declare bankruptcy—and there may be more to come—will probably not honor the cards. If you receive a gift card, use it as soon as possibe. Not only will that help the economy, but you may lose it if you wait too long. Many gift cards lose value over time now, even if the issuing company stays in business.

Seized Tanker Anchors Off Somalia. Somalian pirates siezed an oil tanker from Saudi Arabia, one of the largest man-made objects in the world. The tanker carries one quarter of Saudi Arabia’s daily oil output, two million barrels, and is thought to be headed towards the United States. The hijackers will most likely be asking for the highest ransom ever paid to free the oil and the crew. The biggest concern is obviously the lives of the hostages, but will this have an effect on the price of a gallon of gas here?

Things it’s Cheaper to Do Yourself. Hiring out certain tasks has an appeal because it frees your time (in exchange for money) so you can spend that time on more more important, and possibly income-generating, tasks. But there are some fairly simple activities that would save you enough money if you do them yourself.

No Debt Plan. This is a series, currently on Part Nine, that helps you set up a budget, get out of debt, and build wealth.

Best Year-End Move for Salaried Taxpayers. Maximize contribution to tax-deferred retirement plans. Last month, I increased my 401(k) contribution to 50% of my salary, split evenly between a before-tax contribution (matched up to 4%) and an after-tax Roth 401(k) contribution. Even doing so, I will not hit the $15,500 ceiling because I started the year too low.

Tip’d is a social media website that lets you share and comment on finance-related current events, and today is its official launch date. I mentioned Tip’d last month when it was first announced to early adopters. At the end of every article on Consumerism Commentary, I have included a link labeled “Add to Tip’d.” With this, you can share stories from Consumerism Commentary with another audience. Connect with me on Tip’d.

For the “News and Blogs” features, which I plan to run almost daily as long as I have additional articles to share, I select some of the most interesting posts from my RSS reader and from pfblogs.org. If you don’t believe you blog is included on my RSS reader, please let me know to so I can add it. Thanks!

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