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Frugality Is Bad For You

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What you need to know as a marketer and businessperson is that people generally aren’t rational creatures, and because of that it’s relatively simple to get them to give you their money. What you need to know as a rational, responsible human is that people are always scheming to get your money and you should make it harder for them to do it.

Ah, conundrums.  

We’ll chalk up this New York Times piece (oh look, it’s on Fox, too) to timely scholarly research reporting and not conspiracy theory—that’d make us crazy. John Tierney passes on warnings from a pair of Ivy League business scholars that being too financially prudent can be bad for your mental health. Borrowing a medical term, “hyperopia,” which means far-sighted, Ran Kivetz of Columbia and Anat Keinan of Harvard warn that too much frugality can lead to more regret down the road, and you don’t want that do you?
Too Much Money Saving
Have fun, spend money, pamper yourself. You’ll feel better about it in the long run. Students who spend their Spring Break studying instead of doing body shots in Panama City look back years later and regret they didn’t drop the books and pick up a package of beads. If you spend all your time saving money and planning for the future, you’ll not enjoy the wonders of the present, and when you get too old to swim in your pile of money, you’ll wish you’d eaten more steak when you still had teeth.

Dr. Kivetz notes that Puritan guilt over your lost battle with hedonism will pass much quicker than the decades of I-shoulda-bet-it-all-on-black regret. A couple of novel concepts emerge: people would rather not be responsible if they can avoid it; and potential regret may be more powerful than guilt. Give the consumer a choice between $85 cash and an $80 voucher for a massage, they’ll pick the voucher because it will force them to be frivolous rather than sensibly take the higher cash value, which they’ll have to spend on something stupid like rent. 

Well, if I must get a massage…

And yes, for the record, you should get a massage every so often. It’s good for you. Have a milkshake that day too.

As a marketer, what you need to know, then, is that if you offer a promotion on your website or store, cash is trash, man. Offer some indulgence. You’ll save money and the customer will “force” himself to take the luxury. Take the advice and succeed. It’s not your fault the majority of humans are fairly stupid.

As a human I hope you’re smarter than most other humans and that, at least in principle, understand that moderation, as preached throughout the centuries by the sane, is your best bet. As an adult you’ll also understand the concept of future consequences. You’ll be old one day, and medicine isn’t getting any cheaper. If you’re dying tomorrow, by all means start smoking and buy yourself a giant canon to shoot your ashes from.

As a crazy conspiracy theorist you’ll have no problem thinking the timing of these academic “discoveries” is curious. Previously, we considered those speaking from Ivy League business schools collectively “the Man,” “the System,” “the Machine.” And now the Machine, right in the midst of a credit crisis grinding its gears in systemic illiquidity caused first by hedonic indulgence and worsened by the Great Frugality Freakout, just suggested to millions of people-cogs they supply their own, and by default its, own lube.

Look, the government’s leading by example; spend, spend, spend and feel better about yourself today, worry about it briefly tomorrow, the kids can get student loans, and we all can live happily indebted paycheck-to-paycheck until our smiling demise. After all, as Tierney says, “there are no pockets in shrouds,” all hail the gods of consumption. Do it for yourself, do it for America. While you’re happy and broke, let somebody else sit on all that troublesome money.

While you’re reconsidering, for your own psychological well being, owing Citigroup for a plasma TV and paying for it in perpetuity—they don’t mention the stress brought on by debt because this fantasy relies on the happy-happy-joy-joy of the now and the pride of the pictures to prove it later—also consider Keinan’s thesis on the power of narrative (that’d be good storytelling) in business and its sister paper, the perils of the Robin Hood mentality.

Consider that and remember this pair probably pulls in a lot of cash instructing the powers that be on the best ways of separating people from their money. Happy Friday. Have a milk shake, but leave the fur coat, and try to pay off your house instead. And for the record, I’m not in the slightest saying capitalism is bad, just suggesting people use the bootstrap common sense our grandparents tried and failed to beat into everybody.
 

Frugality Is Bad For You
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  • Joseph

    My man Jay-SON!

    Great Article

    “Amen”

    spend, spend spend, yea yea, haha . dude, man, Its a crazy scene,

    Yea, crap, hold on let me get 4 more cell phones on my “family” plan, Starbucks(BTW, DID you know that “Starbucks” is in FF spell check?
    ) and yea a massage , ah yea, that feels so much better then paying my rent ;-)

    This is STILL the problem today, UM……WHY are we listening to dudes( Ivy league ) that live in a BUBBLE

    GET REAL MAN, I live in Rochester NY, AND THIS place is FULL OF people STARVING, ON WELFARE, NO JOBS, LOOK up my city Dr. Kivetz , SPEND WHAT?

    NYS ( New York State) Like Most CAN NOT EVEN MEET THERE OWN BUDGETS……

    SPEND?

    Sorry Jason,…..Long RANT, AND NOW, I feel better, oh and wait that was free, and hell let me order a $15.00 dominios pizza just for the hell of spending :-)

    Love you man!!

    Great Article

    Joseph

    • Jason Lee Miller

      You make me laugh. Keep on keepin’ on. Cheers.

      • Joseph

        Laughing is Good, Do as much as you can now before someone figures out how to tax it ;-)

        Ding Dong, Its Dominoes …wasn’t that the “tagline”

  • http://forum.minneapolisfinder.com Minnesota Forums

    In business, sometimes you need to know what is an expense and what is an investment. An investment pays for itself. Say if you spend $1000 on marketing which leads to $100,000 in earnings, that initial $1000 is not an expense, but investment.

    If you are too frugal to foresee that value of the investment, your business will have a hard time taking off.

    Great article and sound advice!

    • Joseph

      Agreed, BUT things like a NEW PC just because it’s 50% off is just silly , my Pent 4 is just fine to work, I don’t need a “Quad Core” to be “cool” or to “stimulate” ,……

  • http://www.metacafe.com/watch/2579262/west_coast_vinyl_pro_installation/ West Coast Vinyl

    yes it does take money to make money. Of course there is the idea that generates the action to use money to create more money.
    http://digg.com/educational/West_Coast_Vinyl