Friday, September 17, 2010

In praise of the conservative consumer

Much social science is pseudo-science and the proportion of dodgy research is particularly high in business-related areas. Nonetheless, it's interesting to see the concept of conservatism featuring in a recent model of consumer behavior devised by researcher Ross Honeywill. According to a profile by Lucinda Schmidt, Honeywill sees the recent global financial crisis (or 'the great recession') as less significant a turning point than something that occurred about 20 years ago: the advent of a new economic order, and the rise of a new kind of consumer (the 'NEO').

"NEOs are constant consumers: confident, individualistic, creative, free-thinking and socially progressive. Many are under 40, university-educated, self-employed and buy for quality not price.

The other type, 'traditionals', are more comfortable in a structured environment, often have conservative social values and are driven by price and getting the best deal.

Consumers come from these two planets ... The distinction is not between those who have money and those who don't; there are wealthy traditionals and poor NEOs."

The key difference is in the attitude to spending: 'traditionals' are unnerved by uncertainty and have disappeared from the consumer landscape in the US.

Honeywill makes the point that a recovery will only occur when the 'traditionals' start spending again. This may well be, but I can't help feeling that the behavior of the so-called 'traditionals' seems both more rational and more sustainable than that of the NEOs.

In fact this 'socially progressive' new style of consumer who buys for quality might be seen to be behind the massive build-up of debt which caused our current economic troubles. Moreover, the 'constant consumer' will inevitably define life in terms of consumption, and quality of life in terms of product quality.

Traditional modes of operation - based on setting one's own goals and living within one's means - are not only more sustainable but more conducive to a larger - and ultimately freer - view of life.


  1. I think that's an interesting and thoughtful observation.
    Ross Honeywill

  2. Thank you. Good luck with the new book.

  3. Fascinating. I wonder if the NEO can last? If I just considered quality in every transaction, I'd go bankrupt pretty quickly. In the U.S., the private sector has recently begun to pay down debts, while the government is going the NEO way. Our parents were right: save, save, save.

  4. The two really big private consumption items are housing and children. The rest is small beer. Comparisons between the character of any two groups should be based on these items, I think.

    And Consultus is right that government saving or spending is at least as important as private saving and spending. The difference between the two is that private borrowing and spending have to be paid for eventually, whereas governments can run an overdraft indefinitely -- almost, until their credit rating goes kaput.

  5. CONSVLTVS I suspect that elements of the NEO were always there (buying for quality) but the constant consumption thing relates to what Ross Honeywill calls the new economic order. And government spending certainly is a worry - I think Greece and maybe some other European countries will go under soon.

    Alan, you can speak with a lot more authority on most of these topics than I can. Do you know Ross Honeywill's work? (I am only going on the profile - and his nice comment!).

  6. I admit I don't know RH or his book. I'm just a bit skeptical, based on your description of it.

    My claim is an empirical one, which may be false -- that housing and children are the two big expenditures in people's lives. If people choose to have fewer or no children they are in effect choosing to free up their capacity for expenditure on household widgets and gadgets or restaurants. This makes them look like big spenders, but from a different angle they are merely choosing different forms of expenditure.

    Obviously, being a "constant consumer" requires a constant income flow, once you reach your credit limit.

  7. Yes, Alan, I didn't see the point you were making about the big items, but it certainly makes sense.