Financial Insecurity and Deprivation
Consumers worldwide are struggling with serious economic challenges. In virtually every nation, the disparity is growing between the wealthy and the poor. Consumer researchers are responding by trying to understand how consumers experience and cope with financial insecurity and deprivation. They are using an array of psychological, economic, and sociological theories coupled with methodological approaches ranging from experiments to econometrics to ethnographies. At one extreme is research that examines the “bottom of the pyramid” and attempts to understand factors that may mitigate the consequences of dire poverty. At the other extreme is research that considers how consumers who are not themselves currently facing diminished resources may modify their consumption behaviors when they perceive that others are spending less due to recessions or economic hardships.
The research within this collection sheds new light on causes of financial insecurity such as the normalization, at a cultural level, of the use of credit and of indebtedness. It further highlights the consequences of perceived financial deprivation. For instance, people who regard themselves as financially deprived relative to peers may respond by seeking to attain goods that are in scarce supply. Contemporary consumer research also highlights strategies that may enable some who are born into poverty to attain greater financial security. For example, poor migrants to global cities may attain not only economic but also vital social and cultural capital through ongoing interactions as service providers to affluent consumers. As a whole, this research moves us closer to understanding the pernicious roots and pervasive consequences of financial deprivation and helps us to appreciate the complex challenges of ameliorating its impacts.
This special collection begins with an article by Martin and Hill, who assembled data from more than 77,000 consumers across 51 developing and less developed nations to explore the link between societal poverty and life satisfaction. They find that among individuals in societies where people can attain the basic goods and services necessary for survival, those who experience greater relatedness to important others and greater individual autonomy report greater life satisfaction. However, for individuals in societies that lack the basic necessities required for survival, neither relatedness nor autonomy mitigated their self-reported satisfaction with their lives.
While the first article explores experiences of those who are by any objective measure poor, the second article, by Kamakura and Du, uses US household expenditure data collected over more than two decades to explore the behaviors of consumers whose consumption budgets are stable despite economic recessions. The authors find that during recessions, consumers allocate smaller shares of their household consumption budget to visible nonessentials (e.g., travel and apparel) even when their consumption budget is not affected by the recession, and that consumers are likely to devote higher than normal shares of that budget to charity. The authors suggest this pattern of behavior arises from the fact that those who are financially stable do not feel the same “urge to splurge” during recessions because it is easier to “keep up with the Joneses” when they believe that the Joneses are spending less on visible nonessentials.
Third in the collection is an article by Peñaloza and Barnhart that helps shed light on one cause of financial instability: excess personal debt. Based on in-depth interviews with white middle-class Americans, it demonstrates that indebtedness and credit use are rampant because consumers, financial agents, and market institutions have normalized credit and debt in American society. Many consumers in the United States view using credit and debt to “get ahead” or even to indulge in desired goods and services as not only “normal” but as a patriotic duty that serves the interests of the national economy. Consumers with “normal” levels of debt are, however, often in precarious financial positions, and many struggle for much of their adult lives to pay off their debts to achieve financial independence. Thus, ironically, their view of credit and debt as normal ultimately leads these consumers to experience relative financial deprivation.
The fourth article in the collection, by Sharma and Alter, takes a psychological approach to understanding some of the unforeseen consequences of perceived financial deprivation. The authors find that consumers are motivated to counteract the relative deficit in their financial resources by acquiring goods that are consequently unavailable to other consumers in their environment. The results suggest that the inferiority and unpleasant affect associated with financial deprivation motivate consumers to choose and consume scarce goods rather than comparable abundant goods.
The final article in the collection, by Üstüner and Thompson, looks at how migrants from regions of poverty to regions of affluence may successfully reduce their relative financial deprivation. Drawing on ethnographic research conducted in the hairdressing industry in metropolitan regions of Turkey, and studying the long-term relationships between hairdressers and customers, the authors show that service providers who interact on a sustained basis with their relatively privileged clients acquire not only economic but also social and cultural capital that enables them to attain upward socioeconomic mobility.
Life Satisfaction, Self Determination, and Consumption Adequacy at the Bottom of the Pyramid
Concentration on consumption in material environments characterized by too much rather than too little creates important gaps in the understanding of how much of the earth’s population navigates the marketplace. This study investigates bottom-of-the-pyramid, or impoverished, consumers to better comprehend the relationship between societal poverty and individual life satisfaction as moderated by psychological need deprivation and described by self-determination theory. Data were gathered from more than 77,000 individuals in 51 of the world’s poorest countries. Using hierarchical linear models, results show that relatedness and autonomy improve poverty’s negative influence on life satisfaction, but only if basic life necessities are available, described as consumption adequacy. Findings illustrate that without consumption adequacy, psychological need fulfillment has little effect on the poverty–well-being relationship, emphasizing the hopelessness of individuals living in extreme poverty. Findings also suggest to researchers that impoverished consumers not only face different circumstances but actually respond to those circumstances in unique ways.
Journal of Consumer Research, 38 (April 2012), 1155–68
How Economic Contractions and Expansions Affect Expenditure Patterns
In this study, the authors attempt to understand how household budget allocations across various expenditure categories change when the economy is in recession or expansion. The common assumption is that a household’s tastes would not change as a function of economic conditions and therefore any adjustments in expenditure patterns during economic contractions/expansions would simply be due to changes in the consumption budget. Standard economic models translate these budgetary effects into lateral movements along a set of fixed Engel curves, which relate category expenditure shares to total expenditures. The authors propose and test a conceptual framework based on the notion of relative consumption, which prescribes that, for any given total consumption budget, expenditure shares for positional goods/services will decrease during a recession, while shares for nonpositional goods/services will increase (i.e., shifting the entire Engel curve upward or downward, depending on the nature of the expenditure category and the economic conditions).
Journal of Consumer Research, 39 (August 2012), 229–47
Living U.S. Capitalism: The Normalization of Credit/Debt
This research develops a theoretical account of cultural meanings as integral mechanisms in the normalization of credit/debt. Analysis derives these meanings from the credit/debt discourses and practices of 27 white middle-class consumers in the United States and tracks their negotiation in patterns and trajectories in social and market domains. Discussion elaborates the ways informants normalize credit/debt in transposing their categories, in improvising meaning combinations, and in suturing the meaning patterns to particular subject positions in constituting themselves as consumers. Theoretical contributions (1) distinguish consumers’ collaborative production of cultural meanings with friends, family, and others in the social domain and with financial agents and institutions in the market domain and (2) document the productive capacities of these meanings in patterns and trajectories in configuring people as consuming subjects. Implications situate such cultural reproduction processes in the United States in discussing how the national legacy of abundance informs the normalization of credit/debt.
Journal of Consumer Research, 38 (December 2011), 743–62
Financial Deprivation Prompts Consumers to Seek Scarce Goods
Consumers assess their well-being subjectively, largely by comparing the present state of their lives to the state of comparable others and to their own state earlier in time. The authors suggest that consumers similarly assess their financial well-being, and when these evaluations highlight a deficit in their financial position, they pursue strategies that mitigate the associated sense of financial deprivation. Specifically, consumers counteract the relative deficit in their financial resources by acquiring goods that are consequently unavailable to other consumers in their environment. The results from five studies suggest that the inferiority and unpleasant affect associated with financial deprivation motivates consumers to attend to, choose, and consume scarce goods rather than comparable abundant goods. These effects diminish when scarce goods are limited because other people have already obtained them and when consumers attribute their unpleasant feelings to a source unrelated to financial deprivation.
Journal of Consumer Research, 39 (October 2012), 545–60
How Marketplace Performances Produce Interdependent Status Games and Contested Forms of Symbolic Capital
Consumer researchers have commonly analyzed marketplace performances as liminal events structured by context-specific role playing, norms of reciprocity, and cocreative collaborations. As a consequence, this literature remains theoretically mute on questions related to the sociological disparities that arise when marketplace performances forge relationships between affluent consumers and underclass service workers: a circumstance becoming increasingly commonplace owing to trends in the service-oriented global economy. To redress this gap, the authors analyze how such sociocultural differences are manifested and mediated in the provisions of skilled marketplace performances. Building upon Bourdieu’s logic of field analysis, their resulting theoretical framework illuminates a network of structural relations that reconfigures the asymmetrical distribution of class-based resources between these class factions. Rather than being cooperative endeavors conducive to the formation of commercial friendships, the authors show that these class-stratified marketplace performances produce interdependent status games, subtly manifested power struggles, and contested forms of symbolic capital.
Journal of Consumer Research, 38 (February 2012), 796–814