Sociology 125 Lecture 8

Tuesday, September 28

Consumerism

Extra Film showing of films this weekBecause of the problem of the film showing Monday night, there will be extra showings on Wednesday & Thursday at 7:15 in room 1310 Sterling Hall. The film Shop‘Till You Drop will also be shown as a second film next Monday, October 4. The film, Taken for a Ride can be viewed on Google Videos at:

http://video.google.com/videoplay?docid=-2486235784907931000#

Four issues raised in emailsFour issues raised in emails

1.1. Time horizons & intergenerational Time horizons & intergenerational externalities.externalities.

2.2. Skepticism about global warmingSkepticism about global warming

3.3. Alternative explanations of U.S. Alternative explanations of U.S. transportation systemtransportation system

4.4. Positive externalities and the price of Positive externalities and the price of transit ticketstransit tickets

Positive externalities & ticket pricesPositive externalities & ticket prices1.1. Suppose: (a) the direct costs of a ride = $3, and (b) there is Suppose: (a) the direct costs of a ride = $3, and (b) there is

some kind of some kind of negative externalitynegative externality = $1/ride = $1/ride2.2. Then the true cost per ride = $4Then the true cost per ride = $43.3. To cover these costs, the ticket price should be $4, not $3.To cover these costs, the ticket price should be $4, not $3.4.4. Now suppose: (a) the direct costs of a ride = $3, and Now suppose: (a) the direct costs of a ride = $3, and

(b) there is some kind of (b) there is some kind of positivepositive externalityexternality = $1/ride = $1/ride5.5. Then the true cost per ride = $2Then the true cost per ride = $26.6. So, the ticket price should be only $2So, the ticket price should be only $27.7. But the transit company has spent $3 in direct costs to pay But the transit company has spent $3 in direct costs to pay

for the ride.for the ride.8.8. Therefore the society has to somehow pay for the $1 of Therefore the society has to somehow pay for the $1 of

value everyone receives to reimburse the transit company value everyone receives to reimburse the transit company for providing the ridefor providing the ride..

Big Take-Home Message Big Take-Home Message from lecture on Transportationfrom lecture on Transportation

For the free market to enable people to make efficient choices For the free market to enable people to make efficient choices two things must be truetwo things must be true::

1.1. There are no significant externalities – positive or negative – There are no significant externalities – positive or negative – to your individual choice: what you chose does not affect to your individual choice: what you chose does not affect other people.other people.

2.2. The full range of feasible alternatives from which to make The full range of feasible alternatives from which to make your choices can itself be provided by the market.your choices can itself be provided by the market.

Transportation violates both of these principlesTransportation violates both of these principles: :

People will make very different private choices depending People will make very different private choices depending upon whether or not there exists a good, efficient, cheap upon whether or not there exists a good, efficient, cheap public transportation option, public transportation option, but the market itself can but the market itself can never provide this even if it would be economically never provide this even if it would be economically efficient to do soefficient to do so..

DefinitionsDefinitionsConsumerismConsumerism: The belief that : The belief that personal well-being, happiness and personal well-being, happiness and status depend largely on the level status depend largely on the level of personal consumption, of personal consumption, particularly the acquisition of particularly the acquisition of material goods.material goods.

Hyper-consumerismHyper-consumerism: the frenetic : the frenetic pursuit of consumer goodspursuit of consumer goods

1200

1400

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2400

1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007

Square Footage

Growth in median size of new home construction in the U.S., 1963-2007

% of new home construction

Under 1,200 square feet

Over 2,500 square feet

Construction of Small & Big houses, 1973-2005

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5

10

15

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25

30

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45

1973

1975

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1981

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2005

Over 2500 square feet

Under 1200 square feet

What is wrong with consumerism?What is wrong with consumerism?

What is wrong with consumerism?What is wrong with consumerism? 1.1. There are big There are big negative externalities negative externalities from from

consumerismconsumerism

2.2. Consumerism in fact does not make most people Consumerism in fact does not make most people happyhappy

3.3. There are There are systematic biases systematic biases in the system which in the system which generate consumerism. If these system-biases generate consumerism. If these system-biases were eliminated, many – maybe most – people were eliminated, many – maybe most – people would adopt a less consumerist life style. would adopt a less consumerist life style.

System bias #1:System bias #1:Profit maximizing strategiesProfit maximizing strategies

1 week of time

2 weeks of time

System bias #2:System bias #2:Market-failures in leisureMarket-failures in leisure

Number of hours more per year on average that Americans work than people in other countries

.5 weeks

3.4 weeks

6 weeks

9 weeks

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10

20

30

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50

Nothing 40% of payraise

70% of payraise

100% of payraise

The percentage of workers who would give up different proportions of a future pay raise for additional leisure?

From Juliet Schor, The Overworked American, p. 130

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

weeks of paid vacation

Italy

Germany

Netherlands

Denmark

Portugal

Austria

Belgium

Finland

France

Spain

Sweden

U.K.

Norway

Switzerland

Ireland

United States

System bias #3:System bias #3:Changing reference group for Changing reference group for

consumption normsconsumption norms

System bias #4:System bias #4:Credit cardsCredit cards

System bias #5:System bias #5:Rising inequality increases Rising inequality increases

consumerismconsumerism

System bias #6:System bias #6:Abandonment of public Abandonment of public consumption by affluentconsumption by affluent