Being Frugal May Be More Genetic Than Learned
If cheapskates are born and are not entirely the product of learned behavior, as a growing body of research suggests, policies to promote frugal living may do little good.
Shopping at garage sales, collecting soap slivers and other dollar-stretching habits — often derided as neurotic obsessions of the frugal mind — can now be blamed on the thrifty ways of a long-forgotten ancestor. Genetics, researchers say, has a far greater effect on consumer behavior than once thought.
In a study of identical twins, which was published in the April edition of Journal of Consumer Research, marketing professors Itamar Simonson of Stanford University and Aner Sela of the University of Florida report that individual consumer preferences — for such products as chocolate, hybrid cars, movies and jazz — are genetically linked. Those preferences, the authors suggest, are a reflection of individual "prudence" — a possible genetic predisposition to living "in the mainstream" or "on the edge" or somewhere in between. Prudent people are more cost conscious and more averse to reckless spending.
"People are born with a tendency to be more or less prudent," Simonson says, "which would suggest that they are born with a tendency to be more or less frugal."
Other researchers are working to explain the biological mechanism behind frugal living. Marketing professor Scott Rick of the University of Michigan has conducted brain imaging to reveal that frugal people quite literally "feel" the pain of spending in a way that other people do not. In one study, volunteers were shown images of consumer products, followed by their prices. In frugal people, the matching of product with price activated a part of the brain called the insula, a kind of neural distress center associated with such unpleasantries as perceived mistreatment by others, social exclusion and even a foul odor.
In his paper "Tightwads and Spendthrifts," (co-authored by George Loewenstein of Carnegie Mellon University and Cynthia Cryder, now with Washington University in St. Louis), Rick argues that frugal people anticipate the pain associated with spending money, whereas spendthrifts have little reference point for such pain and, therefore, spend like there's no tomorrow. The study, also in the Journal of Consumer Research, reports that tightwads (frugal consumers) account for roughly 25 percent of the population, while spendthrifts account for another 25 percent.
(Rick's latest research includes the surprising finding that cheapskates and spendthrifts often marry each other, but the relationships rarely last).
Though frugal behavior often occurs independently of financial resources — some of the cheapest people I know have the most money — the present economic downtown has ushered penny-pinching from the closet of consumerism and into the mainstream. Living on the cheap has become a cottage industry with websites, blogs and a stream of recent books with titles like The Cheapskate Next Door: The Surprising Secrets of Americans Living Happily Below Their Means and In CHEAP We Trust: The Story of a Misunderstood American Virtue.
Frugality is in vogue.
But researchers like Rick are now saying individual consumer choice is less adaptable than once thought, meaning the sudden caché of living on the cheap is unlikely to attract many lasting converts. (Like many in the field, Rick believes frugal behavior is not entirely a genetic predisposition but also may reflect early environmental influences such as parental spending habits).
"I don't know how many enduring changes [in behavior] you can encourage," he says.
Such wisdom is an apposite counterpoint to the pundits and marketing consultants who've terrified retailers and economists alike by predicting that the trauma of the Great Recession could zap the consumer mojo for a generation or more, spawning a "new normal" of cautious spending behavior. A 2009 Gallup Poll found that a third of Americans were choosing to spend less and expected to keep it that way. More recently a report from management consultants Booz & Co. warned of a "new frugality" that could endure long after the economy recovers. "Frugal behavior," the report explains, "is now considered trendy by many shoppers, and will continue for years to come."
But recent consumer spending figures seem to contradict that argument, and nowadays, few retailers are losing sleep over the "new normal" nightmare. Holiday sales in December surged from a year earlier, surprising most analysts, and in the last quarter of 2010 personal income inched up just 1.7 percent, but consumer spending rose 4.4 percent — the fastest rate of growth since early 2006. So much for frugal chic; ingrained habits are hard to break.
While this may be good news for the economy as a whole (consumer spending accounts for two-thirds of our all-important gross domestic product), the hardwiring of spending behavior may prove an insurmountable challenge for anyone promoting consumer restraint as a remedy for global warming, resource depletion, rising food prices and other intractable problems of an ever-crowded planet. (The world's wealthiest 10 percent account for nearly 80 percent of all private consumption, reports the World Bank).
Such a conclusion is reached in the paper "An examination of the values that motivate socially conscious and frugal consumer behaviours" that appeared last year in the International Journal of Consumer Studies. The University of Surrey's Tim Jackson, along with co-authors Miriam Pepper and David Uzzell, report their findings that social and ecological considerations have little bearing on the motivations of frugal shoppers.
As such, notes Pepper, now a community activist in Australia, "[frugality] does not yet represent a fully developed moral challenge to consumerism."
In fact, the authors suggest, collective frugality at a meaningful scale would require something quite simple but something few people are willing to consider: lower income. The paper's sobering conclusion quotes noted U.K. sociologist Colin Campbell, who has written extensively on consumer behavior: "Consumerism probably reflects the moral nature of contemporary existence as much as any other widespread moral practice; significant change here would therefore require no minor adjustment to our way of life, but the transformation of our entire civilization."