ReviewOfLuxuryFever



Living with Luxury Fever

Randolph Nesse

Review of Luxury Fever, by Robert Frank

Free Press, New York, 1999

The University of Michigan

426 Thompson St, Room 5057

Ann Arbor, MI 48104

734-764-6593

The ultimate evolutionary psychology experiment is nearing completion. The study has been in the field for centuries. After countless iterations it seems to be settling towards a stable equilibrium. Quantitative and detailed behavioral measures have been recorded for hundreds of millions of subjects. The data from this experiment are in the public record and available now for analysis.

This experiment is, of course, the free market economy. It records, in concrete financial detail, how individuals choose to spend their time, effort and money. These data reveal, as no surveys can, what people want. Human desires become market opportunities, soon satisfied by some entrepreneur. The result is, as Adam Smith said famously, as if an invisible hand were guiding the market so it will maximally satisfy our desires. The contours of the free market reflect the shape of human motivation.

But does the market really give us what we want? Frank surveys this scene and draws the reader along—with lucid prose, wry humor, telling anecdotes and a mass of facts—to his thesis that the outcome is far from what we would choose. Most of us work more that we say we want to, and more now than before the labor saving devices of the past generation. Most people work under conditions that do not exactly foster the thrill of creativity and the satisfaction of shared accomplishment. We have polluted air and water, and poor schools. We spend hours commuting so we can live away from crowded, dangerous cities. Our economy has grown a hundred-fold, and yet the underclass persists. Billions of dollars spent on controlling crime still cannot protect even more fortunate citizens from its danger and associated fear. While progress has been made in controlling pollution, it appears likely that global warming will soon transform climate everywhere. If only a small proportion of our wealth could be reallocated, if we could all consume less, we would be happier and the environment would benefit too. But we don’t.

Instead, we are driven to work harder and harder, creating an era of luxury for some that makes life in ancient Rome seem like a night in a cheap motel. Frank’s descriptions of sybaritic excess will arouse most any liberal to a state of grand moral superiority. His description of the $5,000 Viking Frontgate barbeque grill will leave you laughing, although perhaps a bit uncomfortable, as he reveals how the shopping experience escalated his own idea of what was reasonable by several notches. We are fascinated as well as outraged by $14,000 handbags and autos that cost an extra $30,000 so they can reach 60 miles per hour one second faster. By the time he gets to the $2,700,000 watch, we are well past the ludicrous and on to the bizarre. These human proclivities need explanations. For such aspects of human nature, only evolutionary explanations will do.

Frank’s answer is that natural selection has shaped us to compete, not just for absolute levels of resources, but also for relative position. He notes that Greek shipping magnate Stavros Niarchos didn’t order a yacht 375 feet long, he ordered one 10 feet longer than that of Aristotle Onassis. If homes in your neighborhood are now crowding 4000 square feet, you will gradually be less and less comfortable in the 2000 square foot house that seemed like a mansion when you moved from an apartment. If your neighbors all have spouses with a certain shape or income…

This observation is not new. We have been here before, as Frank notes, in the company of Thorsten Veblen and his most felicitous phrase, “conspicuous consumption.” At Carleton College, the faculty recalled the memory of our most famous alumnus at every opportunity. They praised his bold originality, but tended to gloss over his tendency to seduce students and Dean’s wives. There was little mention of how these escapades sent his career careening around the country, until he finally settled down on a street adjacent to Stanford, very near to where Ken Kesey and the Merry Pranksters made their start. But Veblen did get it right, and he even ventured something of an evolutionary explanation. Humans spend much of their life’s effort working hard to get things that are rare so they can display unfakable signals of wealth and position.

There is variation in these tendencies from culture to culture, but it is not some pathology that arises only in modern market societies. It is deep in human nature. This point is not made as forcefully as it might be. Frank’s emphasis on the growth of hedonistic self-indulgence in the past 10 years detracts from the core argument about human nature and leaves us wondering “Why now?” instead of “Why is human nature like this?” His answer to the first question is disturbing and should be frightening. Incomes and savings of the poorest third of workers have hardly increased at all during a time when the wealthiest 10% have seen their assets double. Because rich people are richer than ever, the luxury goods they want are in short supply. Lots with a view have skyrocketed, even while prices of ordinary real estate remain relatively stable. In such an economic setting, it is perfectly understandable that there should be waiting lists for pants that cost $400 and watches that cost $40,000. What is not understandable is why the general populace does not vote to bring it under some control. But that is another story. This book offers plenty of examples of excess, but additional evidence from other cultures would have strengthened the argument.

Does success in this competition make us happy? Luxury Fever provides a crisp review of the extensive recent literature that absolute levels of wealth above a certain minimum do not bring happiness. In Japan, for instance, per capita income increased four fold from 1960 to 1987, but happiness measures stayed as flat as a Kansas highway. Relative wealth is another matter. Self-ratings of subjective well-being among members of a society increase substantially with income. The large variation means that the correlation is only about 0.13, explaining only 2% of the variation. Yet, increasing income still will, on the average, improve an individual’s happiness significantly. Our actions match these facts. We pursue relative wealth and position, always wanting more. We follow our desires, and they take us to a world of more and more work in a society that could satisfy the basic needs of all its citizens with just a few hours of work each week from each. We know that a new sports car will satisfy our craving for only a few weeks, but our attention is drawn again and again to the comparative acceleration of the BMW vs. the Mercedes, and to fantasies about what others will think as they see us pulling into the employee lot. People work weekends for such transitory pleasures.

It seems senseless. Why do we act this way? Why don’t we all give up just a bit so we can have more equitable societies with clean air, pure water, and schools taught by the most capable people in society? Why don’t we just relax and enjoy life? Frank takes the question on squarely, and gives it an evolutionary answer. We strive for relative position, he says, because that is what has influenced reproductive success. Those who have been satisfied with less than others have had, on the average, fewer children.

Exactly how status and accomplishment increase reproductive success is not the core of this book. For that, there are many good articles documenting the relationship and there is Geoffrey Miller’s hypothesis that this tendency is a product of sexual selection. But the first half of the book makes its point clearly and strongly. We seek relative affluence and status. There is no finish line, no point of satiation, because our desire motivates us to seek more than others have. In the data of social science, students consistently choose to take a hypothetical job that will pay $40,000 in a community where everyone else earns $30,000 instead of a job that pays 60,000 in a community where everyone else earns $80,000.

At this point Frank takes the leap. Instead of concluding, as so many evolutionary psychology books do, with a feeble hope that we can perhaps somehow use our knowledge to help to control and console ourselves, he uses his evolutionary understanding to derive specific recommendations for how society can be made better for all. You will not find whining or utopian schemes here. There are no pleas for comrades to treat each other as brothers, no tirades against the evils of private property. He does not advocate wonderful but impossible plans to redistribute wealth in a great social lurch. As Frank puts it, “To say that the world we live in is not perfect is not an interesting claim. The real question is whether there is any practical way to make it better.” (p. 6) So, he offers just what you would expect from a fine economist, a simple policy proposal.

If what we want is relative, he says, then it should not matter how much you have, except in relation to what others have. People with 400 foot yachts would be just as happy with 300 foot yachts, so long as those who had 350 foot yachts had to move down to 250 footers. If your car took an extra second to reach 60 mph, that would not be a problem if it remained faster than the other person’s car. The trick is to find a way to impose some restraint on everyone so people can pursue their desires in ways that are less harmful to them, society and the environment.

A luxury tax seems like the solution, but history shows that such schemes are unenforceable. If they can be enforced, as the sumptuary laws were in Puritan times, people just turn their competition to other arenas. The Puritan prohibition against wearing lace, for instance, soon made buttons exorbitantly expensive items of display. Likewise, a tax on expenditures beyond a certain minimum would work, but history shows it cannot be enforced.

Frank’s proposal is simplicity itself. He suggests exempting savings from tax. The result is that only your expenditures are taxed, presumably at an appropriately progressive rate that soaks the rich right up to the squeaking point. Everyone would stay in the same rank order, but we could all work a bit less and relax a bit more, to say nothing of having more money to spend on schools, roads and, of course, prisons. The increased savings would, he says, provide further capital for industry. I confess I wonder a bit about possible unintended consequences. After all, Robert Frank is also one of the architects of airline deregulation, an experiment with unintended consequences of which we all are all too aware. For instance, if people really curtailed their spending by at least several percent of their income, how would that effect the delicate balance between saving and spending that moves the economy? How would savings be used? Could they create the kind of economic gridlock that has gripped Japan for the past decade?

To assess the likely consequences, and the feasibility, would require expertise in economics and politics considerably beyond mine. There must be historical examples, mathematical models and projections to draw on. There must be arguments on the other side. As this proposal gets taken more seriously, we will hear them. We may also hear more about Frank’s other work, some of it, such as his work on commitment and emotions, profound and also intimately related to human motivation.

Luxury Fever is so full of entertaining nuggets that it is easy to overlook the importance of its arguments. It demonstrates how our inclinations lead us to act in ways that create both waste and less satisfying lives. It brings Veblen’s enterprise squarely into the realm of evolutionary psychology. And instead of ending with the hope that we can somehow transcend our nasty nature, it offers a specific recommendation for a plausible change in public policy. Best of all, it shows how evolutionary psychology can make the world a better place. Buy two copies, and give one to your congressperson.

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