Consumer obligation and counterproductive consumption: can the things we don’t use affect us more than those we do?
Rachel Haase and David Courard-Hauri, Environmental Science and Policy Program, Drake University
•The presence of multiple choices can actually lead to a reduction of utility during
the use of a given item. People worry about the potential for regret over a poor
choice (Gilovich and Medvec, 1995), leading to more effort in choice trade-offs
than would be expected from a simple optimization of a utility and time equation,
and the effort increases with number of choices.
Abstract
Most economic consumption is relatively exclusive in time, as there is only a
limited number of activities in which one may engage at a given moment.
However, items that we own may affect us in different ways depending upon
whether we are using them or not. We introduce a time-based model in which
utility is affected both by goods that one is using and by some that one is not,
with the non-use utility potentially either positive or negative. We explore the
implications of findings from psychology suggesting that excessive choice
may lead to negative affect, as well as the effects that optimistic estimates of
time available for consumption (“planning fallacy”) have on this model. This
extension has implications for explaining observations such as the very low
marginal utility of income in post-industrial societies (modified Easterlin
Paradox), as well as the counterintuitive success many individuals have
reported with voluntary simplicity.
•Trade-offs detract from the satisfaction of a decision because they emphasize what
a choice lacks and the other opportunities one must pass up in making that choice.
(Schwartz, 2004; Iyengar and Lepper, 2002).
Model
•There are several explanations for the very weak relationship between money
and well-being at high levels of income.
•Diminishing marginal utility of money (Steedman, 2006)
•Hedonic treadmill – people adapt to new circumstances relatively completely
(Brickman and Campbell, 1971; Frederick and Loewenstein, 1999)
•Relative comparisons - the benefit people gain from increased consumption is
reduced if those with whom they are comparing themselves are able to
increase consumption as well (Easterlin, 1973; Layard, 2005)
Assume ut ility declines over time as one uses an it em, such that
2
u(xi )  ai xi  bi xi , and ri is the rat e at whichxi can be used, such that
xi / ri  amount of t ime t hat the item
i is used. T hen


x
xi
2
i
U   ai xi  bi xi   k  and t otal t imeT  
ri k i 
i 
i ri
T hen, if is a Lagrangian mult iplier, we can set up t he equat ion
L
 (ai xi  b x ) 1


  k 
dxi
xi
ri k i
ri
2
i i
Differentiating, setting the different ial equal to zero, and solving
xi ,for
1

a i   k 
ri k i
ri
xi 
,
2bi
•These explanations fail to capture an observation that has been made repeatedly
by numerous researchers: far from leading to even temporary negative affect, a
significant intentional reduction in consumer goods can, in many cases, lead to
stable or even increased utility.
•An increase in the number of choices can actually reduce satisfaction with the
item that is finally chosen (Botti and Iyengar, 2002). Extensive choices may be
initially appealing to decision-makers, but they negatively affect both
satisfaction with their choices and their motivation to choose. This suggests that
the potential for increased goods (availability of consumption) may encourage
individuals to purchase items, but the actual experience of having a large amount
of goods may be overwhelming, or at least produce more disbenefit than
expected. Having more options increases the responsibility choosers feel for
their decision, making the process more frustrating and the result less satisfying.
Discussion


U   ut (xi ,c t )   k, t (c t )dt


k i
t
•“Easterlin Paradox:” after a saturation point (around $10,000 per year), national 
income growth does not lead to an increase in average levels of subjective wellbeing (SWB) over time (Easterlin, 1974, 2004)
More stuff means more choices. Good thing?
•During planning, we tend to imagine that our total time available, T, is larger than it
actually is (planning paradox). In this case, the T considered in purchasing decisions
is greater than the T experienced during consumption. In our model, this leads to
greater utility loss than would be expected if the only cost were the misallocation of
money. If we think that we are going to have more time than we will have in reality,
then the purchase of things that we won’t actually have time to use will actually
decrease our overall utility.
ut (xi ,c t ) = Utility of usingxi at timet, given the vector of previous choices
ct
 i, t (c t ) = Utility of itemi at timet, given c t , when using something else. Often negative. Consumption is not instantaneous, and we often think about things that we are not
Introduction
•Consumption is neither instantaneous nor exclusive.
•Many objects in our possession can influence utility even if we are not directly
consuming them, and those influences may vary over time, sometimes even
changing sign.
Effect of time
meaning t hat a consumer will use an item
i if ri ai     k .
k i
Notice that /T  0; as t ime available for consumpt ion increases, marginal
ut ilit y declines because more time is available for boredom to set in.
Misestimation, regret, and salience

•Humans are quite poor at estimating future utility, especially when relevant factors
are not made salient, and this is likely to lead to overconsumption of durable goods.
•People may rapidly adapt to a new item, such that it provides little to no additional
utility over time (Schwartz, 2004).
•People may become bored with an item, or it may undergo an apparent utility
decline due to rapid obsolescence.
•A negative γ might be largely constant in time. This would be the case if an unused
item continued to produce psychic disbenefit. Regret may also be experienced due
to having purchased an item so prone to obsolescence.
•During purchasing decisions, merchants have a significant incentive to make
salient potentially positive γ, while obscuring the potential for negative γ. The
utility of using an item is stressed, while potential time conflicts are minimized.
doing while we are in the process of using a particular consumer item. In many cases,
these thoughts question whether we could or should be engaging in an alternate
activity. Because of various potential errors in our ability to estimate utility stability,
time availability, and disbenefits from lack of use, negative affect has the potential to
build up to a point where it leads to a significant and unpredicted utility decline. Our
work suggests that this effect may contribute to the rapid decline in marginal utility
with high levels of consumption, as well as the lack of utility decline reported during
intentional simplification.
Many of the reasons why we would expect negative utility from an unused item are
well-studied, but it is difficult to quantify this value for individual items, let alone the
full range of for all items one owns under all circumstances. This difficulty extends
to consumers, and complicates their choices in ways not currently discussed in the
economics literature. Economic models do not simply represent an external,
independent reality, but they can become internalized and produce behavior changes
both in those who study them (Frank and Schulze, 2000), and in the culture at large
(Ferraro, Pfeffer, and Sutton, 2009). There is a danger in ignoring effects of items not
being used simply because these effects are difficult to quantify, because this
disregard may reduce the salience of this disbenefit during consumption decisions.
There are similar dangers in the disregard of time constraints, which are likely to be
as binding upon actual consumption in post-industrial economies as are income
constraints.
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