2008 Headlines
We Are What We Buy
Behavioral scientists from diverse fields try to unravel the meaning of consumption
August 25, 2008 | Ithaca, NY | Peer pressure. Social status. Sentimental value. Fitting in, or standing out. Consumers' behavior is pulled by all of these influences — and others not yet fully understood, according to two Cornell economists who addressed a recent conference on August 16 at Sage Hall. The event, "The Meaning of Consumption," held August 14-17 at Sage Hall, drew researchers from economics, psychology, sociology, marketing, and other fields who are unraveling the meaning of consumption.
To Ori Heffetz, assistant professor of economics at the Johnson School at Cornell University, it's time to rethink assumptions that people buy the things they need and want because those things make them happier or healthier. "Some goods are consumed not just for their intrinsic value," he told those at the conference after showing a clip from the film "Pulp Fiction" involving an heirloom gold watch. The watch is saved in the film because of its sentimental value, he notes, not because it is a timepiece.
This example, says Heffetz, typifies symbolic consumption. Likewise, a wedding ring is not just jewelry, it symbolizes a union. Our purchases, then, are associated with meaning outside the objects themselves, and reflect some aspect of a consumer's identity.
"Because the intrinsic features of goods are no longer the only important features of a commodity, demand may follow associations with symbols, and supply may be more focused on symbol production, including advertising innovations," Heffetz says. "Owning a big house equals success and high social status. There is a symbolic component to everything we do."
Applying this research to the business realm involves exploring factors beyond the face value of a product. A watch can be sold as a reliable device for keeping time, or it can be marketed as a symbol of a certain social class, sending a message about the person who wears it, Heffetz says. And while advertisers have explored consumers' desire to stand out for years, economists typically assume that we produce the set of goods we want to consume as final products. "If part of what we produce and consume are symbols and symbolic associations," Heffetz speculates, "then part of our GDP depends on these associations. For example, as green becomes 'the new black,' companies switch to greener production and greener products, or at least to greener marketing campaigns."
Benjamin Ho offers a different take on the impact of symbolism among consumers. Ho, also an assistant professor of economics at the Johnson School at Cornell University, focuses his research on purchasing patterns and the ties people establish with others – that is, the "fitting in" side of consumer behavior.
"We know that people consume goods and experiences along with others — we chat, we avoid people, we flirt," he says. "The utility of such interactions depends on the identity of the participant. With some consumers, it's not just what a commodity costs, but what kind of signal it sends to others."
Ho cites an experiment in which the once-popular Lance Armstrong Livestrong bracelets were distributed in two college dormitories: In one dorm, one-third of the students received the bracelets, and in the other dorm, two-thirds of the students received them. After a week, all those who had received bracelets in the first dorm – where fewer were distributed – were wearing them, while only about half of the students in the second dorm – where more were distributed – still put them on. Follow up studies found that the decision to wear the bracelet depends on the identity of the others wearing them, "Whether other bracelet wearers were more sports-focused or academic-focused affected people's consumption choices," says Ho.
"The question becomes, how do we figure out who starts trends and who spreads them?" Ho continues. "And the answer involves understanding the dynamics of social networks. By understanding what people value and who they interact with, we can understand how a person's consumption decisions depend on those around him."
Fads and fashions come and go, Ho says, so companies should consider how their identity-related marketing interacts with the social networks their customers are in. Firms should associate their brand, not just with groups that others aspire to (for example, fashion models and athletes), but also with both edgy outsiders, and with those who are central in their network. The recent spread of viral marketing is one example of firms taking advantage of social networks. These principles apply equally well to those interested in other behaviors, such as technology adoption, political affiliation, and schooling decisions.
"Personal identity and social networks allow us to understand trends and how companies react to them," says Ho. "There is an intrinsic value to interacting with others. We can observe how goods differ in terms of their visibility and how they differ in terms of what they mean to consumers, and then we can use these attributes to predict how fashions come and go."
Written by Jay Wrolstad
