The Real Cost of Impulse Buying

Impulse buying has been around ever since the start of commerce.

For instance, have you ever spent money on something and then found you needed to keep spending money because of that initial purchase? Suddenly the new couch makes the end tables look out of place, so you get some new tables, and a new rug while you are at it.

Now such a nice living room set calls for a bigger TV. All you wanted was a new couch, but you ended buying a whole new living room set – then you feel guilty and out of control with impulse buying.

Don’t worry. This is a common psychological effect called the Diderot Effect and has explained spiraling consumption for 250 years.

The Diderot Effect Origins

Named after a French philosopher named Denis Diderot, who had spiraling consumption. After living his entire life impoverished and struggling to get by (but mostly content), in 1763, Catherine the Great offered him a large sum of money in exchange for his library. Diderot founded Encyclopédie and was a notoriously well-read man. Plus, this money helped pay for his daughter’s dowery – the main reason for getting this money, so he was more than willing to part with some of his books.

Upon receiving the money, he purchased a new scarlet robe.

Rather than feeling content and grateful for what he was given, Diderot fell into a spiral of dissatisfaction.

He said there was “no more coordination, no more unity, no more beauty” in his life because the scarlet robe was so out-of-place in comparison to the rest of his humble belongings. He replaced his wicker chair with a leather one, he replaced all the rest of the furniture and even replaced the vanity in his bathroom. Eventually, sifting through every part of his life until he was drowning in excess, luxury debt, and most importantly, dissatisfaction with his impulse buying.

The Philosopher later lamented in his letters, “I was the absolute master of my old dressing gown”, Diderot writes, “but I have become a slave to my new one … Beware of the contamination of sudden wealth. The poor man may take his ease without thinking of appearances, but the rich man is always under a strain”

Most of the strain is self-imposed.

What the Diderot Effect is

Working from Diderot’s story, Grant McCracken, an anthropologist and scholar of consumption patterns, coined the term “Diderot effect” which McCracken describes as

The Diderot effect is thus a mechanism for overconsumption; the attempt to purchase goods that fit together in some subjectively coherent way results in expansive consumer spending and continual trading up. Caught up in this process of the Diderot effect, individuals are also attempting to fulfill their ideal of a good life through the purchase of particular consumer goods.

How The Dideorit Effect and Impulse Buying Work

The Diderot Effect works because of two parts. One because we feel like we have to trade-up and always catch up. For example, just as soon as you re-do your kitchen to dark brown, the latest magazine tells you now grey is now in style. Instead of being happy with your upgraded kitchen, you now feel behind that you don’t have a grey one. What makes this effect worse if other people in our lives get those upgrades.

A study found that when one of a person’s 10 nearest neighbors bought a car, the odds that one person would buy a car of the same brand during the next week and a half jumped 86% to be more likely. Just seeing a neighbor with a new car makes people want one themselves, even if their current one is fine.

Also, purchases can then become part of a particular identity we are trying to establish. Notice how Diderot describes himself as a rich man in the second quote because that is what he wants to be. People impulse buy things to live the life they think they want or one that fits who they want to be.

That explains why the average debt of an American (excluding mortgage) is $38,000.

The costs of the material (H2)

A new garage needs a new car, a new kitchen needs new appliances, going to a new city requires a new wardrobe, and so on.

Be careful of that first purchase, which leads to the next purchases.

The Costs of the Immaterial

Also, be aware of the immaterial (mainly time) cost of your new purchases. That new TV might “only” be $1,000, but now you feel the need to justify your purchase.

Instead of figuring out your goals , working on your side hustle, or working on building a relationship you now sit in front of the TV on weeknights and the weekends.

Some purchases require time for you to make use of them. Before making the purchase, ask yourself if you want to dedicate that much free-time to this activity.

How to avoid & limit Impulse Buying

Knowing about the Diderot effect is helpful, and having some tips to get there is even better!

Reduce your Exposure

Unsubscribe from the emails of your favorite clothing brand that offers you 20% off your purchase. As great as that deal is, you are still spending money you weren’t planning on. By reducing what you see, you will not want the latest fashion trend or shiny gadgets.

Do your Analysis

Thinking of a big purchase? By seeing the purchase along with all “those little things” after it helps you see the true cost of that couch. Will the couch be a good stand-alone piece, or will it call for the entire living room to be upgraded? If you understand the ramifications of the purchase ahead of time, you can make better-informed decisions.

Buy One, Give On:

Just like how Tom’s gives shoes to developing countries when you buy a pair, look to do the same in your personal life. When you buy a new TV, give your old one away instead of moving it to the spare bedroom. Because then the old TV might need to upgrade that old room. By giving away your little-used items, you help the community while reducing your clutter.

Make your items fit the lifestyle you want

When making purchases, it is easy to feel defined by what you buy. Instead, craft your identity away from your materials, and then get the materials that provide utility to you to fit those needs.

Explore new hobbies cheaply

Just because you want to explore adding a new hobby or try something new does not mean you need the best items right at the start. If you want to learn to paint, the store-brand paints are fine, to begin with. If you want to make a planted tank, get what you can for free from the community, buy used items from people, and purchase the rest when it goes on sale. By not needing the “best” you can cheaply explore hobbies to add that can enrich your life.

Discover more on how to investigate hobbies here!

Main Take-Aways

• The Diderot Effect explains why we sometimes spiral into impulse buying things we don’t need or buying things to make ourselves into the desired identity.
• Recognize the Diderot Effect by seeing what else your purchase would make you buy to go along with that new item.
• You can continually add to your identity without having to purchase lots of new things.

Action Item

What is the biggest purchase you are debating right now? Are there other costs go along with this item? What else will you have to upgrade? After you run this analysis, do you still want this item?