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Market News

 March 12, 2007
The Benefits of Our Hardwired Need to Consume

 (by The Allenby Column) - That humans are inclined to make choices that offer more pleasure than pain comes as no surprise, but a look at how marketing -- whether of consumer goods or environmental causes -- offers intriguing ideas on how to create change, Brad Allenby writes.

The issue of consumption is perhaps one of the most vexed in the environmental and sustainability discourses, especially when contrasting the United States, which tends towards more of a free market, free consumer choice philosophy, with the European Union. Some interesting recent work indicates that it may also be much more complex than we generally realize.

Take the recent work by George Lowenstein at Carnegie-Mellon University, Brian Knutson of Stanford, and Drazen Prelec of MIT. In order to better understand the brain chemistry underlying consumption, they presented product choices, then payment choices, to volunteers while scanning their brains with functional magnetic resonance imaging. They found that the nucleus accumbens, which is involved in processing reward stimuli (food, recreational drugs) was activated by presentation of desirable products such as chocolates, while the insular cortex, linked to expectations of pain, was activated by price information.

After both product and price were presented, the prefrontal cortex, an area associated with rational calculation, engaged as well. This not only indicated that modern behavior ("rational" consumption choices) are piggybacking on neural circuits evolved for much different circumstances (not a surprise), but leads to some interesting if speculative possibilities.

A fairly straightforward interpretation of these data is the suggestion that, at the neural level, consumption is affected, perhaps significantly, by a weighing of immediate pleasure versus immediate pain, rather than rational calculation, which only comes later. This may not sound revolutionary, especially to marketing gurus, but it nonetheless has some substantial implications.

To begin with, it emphasizes the importance of marketing and presentation in consumption: if the benefits of a product can be made explicit and attractive from the beginning, the decision to purchase can be encouraged before the "rational weighing" process is even engaged. This might argue against the traditional environmental project of reducing consumption by generating large amounts of environmental information to be appended to particular products: if the V8 GT or large SUV is initially appealing, information on fuel consumption may be only marginally relevant because it enters the cognitive processes after the purchasing decision is essentially made.

Conceptually, in other words, the environmental approach to reducing consumption through product specific information implicitly accepts "the rational consumer" model of human behavior: provide more information on social and environmental costs, and consumers, rationally balancing their options, will choose the more "rational" outcome -- that is, environmental preferability (remembering that consumers may not share the values prioritization of environmentalists). This appears to be an oversimplistic, if not incorrect, model of consumer cognition.

However, while this research might discourage product-by-product information schemes, it might support general anti-consumption campaigns. After all, such campaigns when successful make the act of consumption itself more negative emotionally, and thus enhance the expectations of pain associated with any consumption (the downsides of consistently negative messages from environmentalists are well known, however, and might generate consumer backlash that outweighs such consumption reduction effects over time).

Another, perhaps more difficult, implication is the possibility that use of credit, which on balance reduces the immediate "pain" of a purchase because nothing material is apparently given up in exchange, creates a context within which consumers are inherently weighted towards consumption (the researchers have not yet tested this hypothesis). The growth and differentiation of credit mechanisms, and the dematerialization of money, are long-term trends in developed economies, and a major mechanism supporting the continued growth in complexity of financial and economic structures. Thus, it becomes problematic for anti-consumption activists if the inherent dynamics and structure of economic systems as they evolve shifts the balance between consumption and pain towards consumption.

That consumption has deep emotional dimensions, and that access to credit encourages economic growth, and along with it consumption, are not revolutionary findings. But that consumption decisions engage particular brain pathways in ways that affect the effectiveness of environmental campaigns and projects is both interesting and important, even if at this point it may be difficult to be sure quite how these new discoveries cut.

At the least, however, the demonstration that even apparently straightforward decisions are, in fact, grounded in pre-rational cognitive information processing suggests that environmental and sustainability activists need to become more sophisticated in the way they think about, and seek to socially engineer, consumption decisions. For social engineering is a double-edged sword, and especially in areas like consumption, increasingly understood as involving complex and fundamental behaviors, such efforts can rebound against those who seek to impose such behavior change, regardless of their good intentions.