What are the Causes?

There are 4 factors that drive consumerism in today's society: easy access to consumer credit, aggressive and intrusive advertising, lack of financial education, and a shift in personal values.

Easy Access to Consumer Credit

Why is it so easy to get a credit card? Because credit card companies make a lot of

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As a trustee in bankruptcy, I am seeing an increase in problem debtors whose financial difficulties arise from poor spending habits, particularly compulsive spending and lack of financial discipline.

This article will address one of the key causes of financial difficulty today: consumerism, and will examine its causes and consequences. The trend of consumerism is particularly pronounced in the younger generation of consumers, and this article will focus on this particular demographic.

I am hopeful that readers shall find this article insightful and will cause them to re-examine their own spending habits in order to avoid (or avoid repeating) the pitfalls of this increasing phenomenon.

Defining the Problem

There are several definitions for consumerism, but the one we're interested in as follows:

"A term used to describe the effects of equating personal happiness with purchasing material possessions and consumption.[1]"

Consumerism is often associated with a desire to purchase goods and services which:

• are often "wants" rather than "needs". An example is the decision of a consumer to purchase a television with the latest technology, even though he/she already has a television that is in perfect working condition; and/or

• are priced greatly in excess of their intrinsic (i.e., real or inherent) worth. The "premium" can often be attributed to the item being a "name brand" product and the prestige associated with a particular brand. Hence, a sweater sold in a Benetton store will have a substantially higher price tag than say, a sweater sold in a Wal-Mart, even though that sweater may have been produced by the same Chinese manufacturer with the same specifications.

Many will agree that there is nothing wrong with the purchase of a good or service that gives pleasure to the consumer if he/she can afford it. Hence, if someone can easily afford to purchase a $5,000 Prada handbag with cash, then by all means, do so.

However, the situation becomes problematic when society at large projects a need for, or an entitlement to, these same types of products or levels of consumption, not just those who can afford them. This problem has dire consequences for individuals and the society they live in, which will be examined later.

What are the Causes?

There are 4 factors that drive consumerism in today's society: easy access to consumer credit, aggressive and intrusive advertising, lack of financial education, and a shift in personal values.

Easy Access to Consumer Credit

Why is it so easy to get a credit card? Because credit card companies make a lot of

I am hopeful that readers shall find this article insightful and will cause them to re-examine their own spending habits in order to avoid (or avoid repeating) the pitfalls of this increasing phenomenon.

Defining the Problem

There are several definitions for consumerism, but the one we're interested in as follows:

"A term used to describe the effects of equating personal happiness with purchasing material possessions and consumption.[1]"

Consumerism is often associated with a desire to purchase goods and services which:

• are often "wants" rather than "needs". An example is the decision of a consumer to purchase a television with the latest technology, even though he/she already has a television that is in perfect working condition; and/or

• are priced greatly in excess of their intrinsic (i.e., real or inherent) worth. The "premium" can often be attributed to the item being a "name brand" product and the prestige associated with a particular brand. Hence, a sweater sold in a Benetton store will have a substantially higher price tag than say, a sweater sold in a Wal-Mart, even though that sweater may have been produced by the same Chinese manufacturer with the same specifications.

Many will agree that there is nothing wrong with the purchase of a good or service that gives pleasure to the consumer if he/she can afford it. Hence, if someone can easily afford to purchase a $5,000 Prada handbag with cash, then by all means, do so.

However, the situation becomes problematic when society at large projects a need for, or an entitlement to, these same types of products or levels of consumption, not just those who can afford them. This problem has dire consequences for individuals and the society they live in, which will be examined later.

What are the Causes?

There are 4 factors that drive consumerism in today's society: easy access to consumer credit, aggressive and intrusive advertising, lack of financial education, and a shift in personal values.

Easy Access to Consumer Credit

Why is it so easy to get a credit card? Because credit card companies make a lot of

• are often "wants" rather than "needs". An example is the decision of a consumer to purchase a television with the latest technology, even though he/she already has a television that is in perfect working condition; and/or

• are priced greatly in excess of their intrinsic (i.e., real or inherent) worth. The "premium" can often be attributed to the item being a "name brand" product and the prestige associated with a particular brand. Hence, a sweater sold in a Benetton store will have a substantially higher price tag than say, a sweater sold in a Wal-Mart, even though that sweater may have been produced by the same Chinese manufacturer with the same specifications.

Many will agree that there is nothing wrong with the purchase of a good or service that gives pleasure to the consumer if he/she can afford it. Hence, if someone can easily afford to purchase a $5,000 Prada handbag with cash, then by all means, do so.

However, the situation becomes problematic when society at large projects a need for, or an entitlement to, these same types of products or levels of consumption, not just those who can afford them. This problem has dire consequences for individuals and the society they live in, which will be examined later.

What are the Causes?

There are 4 factors that drive consumerism in today's society: easy access to consumer credit, aggressive and intrusive advertising, lack of financial education, and a shift in personal values.

Easy Access to Consumer Credit

Why is it so easy to get a credit card? Because credit card companies make a lot of

Many will agree that there is nothing wrong with the purchase of a good or service that gives pleasure to the consumer if he/she can afford it. Hence, if someone can easily afford to purchase a $5,000 Prada handbag with cash, then by all means, do so.

However, the situation becomes problematic when society at large projects a need for, or an entitlement to, these same types of products or levels of consumption, not just those who can afford them. This problem has dire consequences for individuals and the society they live in, which will be examined later.

What are the Causes?

There are 4 factors that drive consumerism in today's society: easy access to consumer credit, aggressive and intrusive advertising, lack of financial education, and a shift in personal values.

Easy Access to Consumer Credit

Why is it so easy to get a credit card? Because credit card companies make a lot of

What are the Causes?

There are 4 factors that drive consumerism in today's society: easy access to consumer credit, aggressive and intrusive advertising, lack of financial education, and a shift in personal values.

Easy Access to Consumer Credit

Why is it so easy to get a credit card? Because credit card companies make a lot of money from interest revenue and credit card fees. For example, in the United States, pre-tax profits for credit card companies have grown 360 percent from 1990 to 2003, while fee revenues have grown 250 percent.[2] Therefore, with this type of profitability, it is in their interest to issue as many credit cards as they can.

Advertising

Selling consumer products, be it a car, deodorant, perfume, or jeans, is an extremely competitive business. Consequently, we are constantly bombarded with advertisements wherever we go, or when doing whatever we do: watching television, surfing the internet, in the movie theatre, at the gas pump. According to a 1998 United Nations Human Development Report, the growth in global ad spending "now outpaces the growth of the world economy by one-third.[3]"

The reason for this siege in advertising is the firmly held belief in the marketing profession that the more advertising is out there, the more aggressively brands must market to stand out. One senior ad executive with a major global marketing firm had candidly stated that - "consumers are like roaches - you spray them and spray them and they get immune after a while.[4]"

So if consumers are like "roaches", then marketers will be constantly taking more creative, and intrusive, measures to advertise their products.

An example is a trend that started in the early to mid 1990s: advertising in public schools, or "In-School Branding". Deep cuts in public education throughout North America led school boards to search for alternative sources of revenue to finance capital expenditures, such as computer equipment. Thus, corporate sponsorships and partnerships stepped in to assist with financing, but with a catch: school boards were required to open their schools to ads and products from their corporate sponsors.[5]

Thus, in today's public schools, one can expect to see soft drink machines selling various brands of soda pop, or fast-food outlets in school cafeterias. "Get them while they're young", the marketers reason, "and they'll be branded for life". Similarly, on university campuses, credit card companies aggressively market their credit cards. Today, it isn't unusual to see recent university graduates maxed out on several credit cards.

The long-term consequence