post-autistic economics review
Issue no. 15,  1 September 2002
article 6



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The Economist’s Long Farewell


Robert E. Lane   (Yale University, USA)


“Farewell! A long farewell to all my greatness.”

                                                                        Cardinal Wolsey, Henry VIII  (III, ii)




Adam (an economist named after Adam Smith [1723-1790]) and Desiderius (a humanist-social scientist named after Desiderius Erasmus [1466-1536]) are having lunch in a local restaurant while discussing the merits and social costs of materialism. They are friends, of a sort. We find them in the midst of an argument. Of course, Adam calls DesideriusDessie” and we shall do the same.


“So what is wrong with materialism?” asked Adam, wiping his material lips with a material napkin -- or at least a modestly material paper napkin.


Dessie knocked on wood to invoke the gods of chance to protect him from violating the laws of nature.  “I want to talk about materialism as a set of beliefs and values, the source of economic man's alleged behavior, not the metaphysical or historical variants.”


“Please get on with it,” said Adam as though he were asking an executioner not to delay any further.


“Good economists,” said Dessie, “have always believed that the bundle of goods people demand changes as their income levels rise: e.g., a smaller proportion of their income is spent on food and shelter and a larger proportion on travel and entertainment and education -- and saving. The only thing that economists, except for Tibor Scitovsky,i have not already noticed is that the goods people in a rich society want are those that are not to be purchased in the market like family felicity and friendship.


“So” asked Adam, “why is your dinner less important than family felicity and friendships?”


“We can't compare them until we know whether or not you have had your dinner. Your namesake, Adam Smith assumed it was dinner time when he talked about the dominance of material self-interest,ii and for many people in the 18th century  dinner time came more often than did dinner. I am only reciting economists' theory of declining marginal utility. In capsule form, if you are hungry, dinner has a higher priority; if (after dinner), you are lonely, friendships are more desirable.”  By comparison, he thought, explaining why two and two make four would be a deep exercise.


“All right,” said Adam somewhat mortified, “but you are not talking simply about a change in the goods people prefer; you are talking about a systematic shift in values; what do you call your new system? ‘The New Humanism’? And you want to contrast this new system with an old one, one that economists call a ‘market economy’ and that you call, much less precisely, ‘materialism’. Aside from substituting a preference for people over commodities, as you might say, what is the difference between the two systems?”


“You brush aside the crucial point -- but one thing at a time,” said Dessie. “You chaps are always talking about margins, so now I propose a marginal decline in materialism with the slack taken up by a marginal increase in the humanistic motives and activities such as friendship and an intrinsic interest in work. Because the data suggest that further increases in GDP per capita in rich countries do not contribute much to happiness,iii a strict utilitarian analysis suggests this marginal change from pursuit of money to pursuit of companionship or other intrinsic goals. But note that this marginal change is utility-efficient only after that point where the utility of one more dollar is the same as, say, one more friend. We have passed that point in the US: number of friends is a better predictor of happiness than is number of dollars possessed.”iv


“If materialism is necessary for growth,” Adam said, “then the lack of materialism implies a static economy and more poverty. It is you who seem to favor a loss of well-being.”


 “The  set of meanings I want to explore,” said Dessie ignoring the criticism, “lie in a measure of materialist attitudes in a consumer society. We are not pioneers creating our own maps of unexplored terrain. Others have been here before us. For example, Marsha Richins and Scott Dawson have developed a measure of materialism that deals with three aspects of the concept: (1) ‘acquisition centrality,’ meaning that ‘materialists place possessions and their acquisition at the center of their lives.’ (2) acquisition and possession of things as the central route to happiness, that is, materialists ‘see possessions and acquisition as essential to their satisfaction and well-being;’ and (3) success is defined in terms of material things: ‘Materialists tend to judge their own and others' success by the number and quality of possessions accumulated.’ Technically, these three elements represent three independent factors in their factor analysis of a broad range of eighteen questions. To measure the first factor, they ask, inter alia, whether the following is generally true for the respondent: ‘Buying things gives me a lot of pleasure.’ To measure the happiness dimension they invite responses to: ‘It sometimes bothers me quite a bit that I can't afford to buy all the things I'd like.’ And to test the third dimension dealing with success they ask agreement or disagreement with the proposition: ‘Some of the most important achievements in life include acquiring material possessions.’v


“You're stacking the deck by your definitions -- a formal rhetorical error,” said Adam. “Here is young Albert starting out in life; he is married and has two small children; he has to pay for shelter, food, clothing and medical care for his family; he should save something lest his job fail and, in any event, for his children's education. Because he cares a lot about money, you call him a materialist and put him down. It isn't fair.” Adam seemed to suffer vicariously for Albert.


“We are not talking about the priority of needs,”vi said Dessie. “I agree with you and, as it happens with Marx who said someplace: ‘We must eat before we think.’ But that is true of people with a variety of motives and points of view. It will be more fruitful if we  focus on Richins and Dawson's conceptualization of materialist beliefs and motives.”


“All right,” said Adam, “but I still don't see what's wrong with emphasizing material acquisitions. Albert, our young father just starting out, did. And what is wrong with agreeing with the vast majority of Americans: those who ‘make it’ financially have, indeed, succeeded?”


“As a matter of fact,” said Dessie wearing his social science hat, “what Americans think of when they think of materialism is: ‘status display,’ seeking ‘wealth for its own sake;’ and people who are ‘predisposed toward money, wealth, innovations, and the possessions of others’.vii So Albert and the rest of us working stiffs may or may not be a materialist, but an interest in earning a living is neither here nor there.” Dessie felt things were going better.


“So now you have a definition and a measure; how does this help us understand the costs of the materialism that makes us rich?” asked Adam weary of distinctions in what had always seemed like a straightforward natural preference for a fungible currency that bought so many pleasures. But Dessie was off on another tack.


The Dark Side of Materialism


“First, materialists are less generous than others,” said Dessie counting on his fingers. Richins and Dawson offered their subjects a hypothetical $20,000 windfall and asked them how they would spend it. As it turned out: ‘materialists would spend three times as much on themselves, would contribute less to charity or church, give less than half as much to friends and family.’ Materialism scores were negatively correlated with support for a specific environmental charity. Compared to others, materialists  also reported that they do not like to lend things to their friends and that they do not like to have guests in their homes.viii


“Second, materialists are more invidious than others, especially but not exclusively when they compare themselves with those who are richer than they are.ix ‘Materialists tend to judge their own and others' success by the number and quality of possessions accumulated.’ They value these things more than they value their relationships to other people.x This may be because of lack of interest in people, a matter of taste -- or because of the lack of social skills that haunts these thing-minded people.”


“Third, materialists seem to be more difficult to satisfy; they report that they need higher incomes than those low in materialism.xi More than others, they are dissatisfied with their lives. As Durkheim prophesied, empirical studies find that: “Although materialists expect acquisition to make them happy, ... the lust for goods can be insatiable: the pleasures of a new acquisition are quickly forgotten and replaced with a desire for more.”xii


“The consequence of all this,” said Dessie, using his hands to wield his fork instead of for counting the points he was making, “is that materialists are significantly less happy than are nonmaterialists: in the Richins and Dawson study, materialism was negatively related “to satisfaction in all the aspects of life measured:” amount of fun you are having (note they are not hedonists), income and standard of living, friends, and even (modestly) with satisfaction with family life.”xiii These findings are not idiosyncratic; another study including young people drawn from outside college life found the same thing.xiv


“The invisible hand is thumbing its nose at you, Dessie,” said Adam in a jocular tone. As you might have guessed, it isn't the fact that people want money but why they want it that influences their happiness. From a study of 260 business students, we know that economic motives include security in old age, current family support, charity (sic!), and personal motives such as relieving self-doubt. Those who sought money for its own sake or because of pride and vanity were, at you might expect, unhappier than others. Those who sought money for such purposes as family support and charity were as happy as anybody else, normally happy.xv I just can't believe” he continued, “that the hard working people that brought us this wealth (he looked around at the restaurant's imitation leather and Coca Cola clock -- and looked away) can have created so much prosperity while suffering the pains of the materialism you describe.”


“Remember,” said Dessie, that we are not talking about Frank Knight's ‘most noble and sensitive characters,’ who are condemned ‘to lead unhappy and futile lives’xvi because they are nonmaterialists; we are talking about the unhappiness of perfect fits: materialists in a material civilization. Moreover, ‘placing money high in the rank ordering [of personal goals] was associated with less vitality, more depression and more anxiety.’ For adolescents, ‘high ratings of the importance of financial success was related to lower global functioning, lower social productivity, and more behavior problems.’xvii


“Are you sure you are not letting your distaste for economic man (or is it economist men?) bias your account of materialism?” asked Adam  who was used to criticisms of the market on ethical ground but never on hedonic grounds. “ If it is the materialists who have brought prosperity to the world, why do people think it is an amoral set of attitudes and beliefs?” 



Does Materialism Crowd Out Moral and Intrinsic Motives?


“I always thought materialism was the butt of criticisms by moralizers,” Adam continued, “not hedonists. But I should remind you that moral economics in its incarnation as Christian economics did not rescue the developing countries of Europe from their poverty and, well, their ‘backwardness’ in the Middle Ages.”


“OK,” said Dessie, “will you agree that if people's material self-interest dominates choices in the presence of monetary appeals and wanes when community service or other ‘intrinsic’ appeals are made salient, that materialism can be said to ‘crowd out’ non-material, often moral appeals?


“We are back to Stigler's proposition that in any test, material self-interest will win over non-material appeals,”xviii said Adam.


“Ah ha, but this time the research is by economists!” said Dessie, triumphantly. “Consider why people pay taxes under circumstances where the chance of being caught cheating is trivial. Will you agree that the only plausible explanation is that they are responsive to community ethical norms, that is, that ethical norms dominate material self-interest in these circumstances?”xix


“Economists never claimed that material self-interest dominates all  other interests, such as maternal love, under all  circumstances. They are talking about market situations,” said Adam, slightly annoyed.


“OK, then,“ said Dessie, “consider the case of attitudes toward depositing nuclear waste in a person's own commune in Switzerland: When not  offered a collective payment, a majority supported it as a civic duty even though they knew the hazards in such waste in their own backyards, but when offered a subsidy, far fewer people accepted the risk. This was not because the offer of money changed the perception of the risk.xx Incidentally,” he continued, “this redefinition of the situation has been found to occur in individual cases in the United States, as well. Experiments find that people are more likely to volunteer to give blood if they are not  paid than if a payment is offered.”xxi


“OK, so ethics and identification with community may sometimes crowd out material motives and material motives can crown out ethical and intrinsic motives,” said Adam, hoping to limit the damage to a few extraordinary situations. “What does that prove?”


“Well,“ said Dessie, “this Zurich crowding out research certainty suggests that as a dominant gestalt, materialism shapes motives and values and crowds out competing one's wherever the competition is less forceful. If you will allow me to personify and dramatize, I see an eternal struggle between THE MATERIALIST seeking gratification of various acquisitive wants, and THE HUMANIST seeking competing gratification of a different set of wants. In a relatively unrelieved materialist culture it is not surprising that MATERIALISM wins. We stack the cards in its favor.” Dessie hardly noticed the mixed metaphors.


Adam was tempted to say that nature stacked the cards and that this was what Darwin was saying in different terms, but the Darwinist defense of the market was not one he wanted to try against Dessie. He could see that he was not making any progress on this theme of competing material and nonmaterial motives. He knew that the next step was an inquiry into how much economists had to be paid to publish in the better journalsxii or, worse, whether economic students were more selfish than others (he was familiar with the Marwell and Ames study showing that they were),xiii and decided it was time to leave this topic. He remembered that wicked little verse aimed at an English professor by Hicks -- not John, but Granville -- at Harvard so long ago:

                                    When some men achieve a mild success

                                    They think of spirit more, and matter less.

                                    And as they wiser grow, wiser and fatter,

                                    They scold the common herd who worship matter.


“I have satisfied my material needs,” he said looking at his empty soup bowl, “and my friendship needs.” He paused as he put his jacket on. “But intellectually, I need more nourishment.”





i Tibor Scitovsky. 1977. The Joyless Economy: An Inquiry into Human Satisfaction and Consumer Dissatisfaction.  New York: Oxford University Press.
ii Adam Smith. 1937 [1776] An Inquiry into the Nature and Causes of The Wealth of Nations,  Edwin Caanan, ed. New York: Modern Library/Random House, p. 14.
iii Ed Diener and Robert Biswas-Diener. 2002. “Will Money Increase Subjective Well-Being? A Literature Review and Guide to Needed Research,” Social Indicators Research.  57: 119-169.
iv Angus Campbell, Philip E. Converse, and Willard L. Rodgers. 1976. The Quality of American Life.   New York: Russell Sage, p. 380.
vi Marsha L. Richins and Scott Dawson. 1992. “A Consumer Values Orientation for Materialism and its Measurement: Scale Development and Validation," Journal of Consumer Research. 19: 303-316 at 308-309.
vi See Abraham H. Maslow. 1970. Motivation and Personality,  2nd ed. New York: Harper & Row.

vii Susan Fournier and Marsha L.  Richins. 1991. Some Theoretical and Popular Notions Concerning Materialism,” Journal of Social Behavior & Personality.  6: 403-414 at p. 403.

viii Richins and Dawson, “A Consumer Values Orientation for Materialism,” pp. 312-313.

ix Russell W. Belk. 1985. “Materialism: Trait Aspects of Living in a Material World,” Journal of Consumer Research,  12: 265-280.

x Richins and Dawson, “A Consumer Values Orientation for Materialism,” pp. 304, 308.

xi  Ibid., p. 311.

xii Ibid., p. 308.

xiii Ibid., p. 313.

xiv Tim Kasser and Richard Ryan. 1996. “Further Examining the American Dream: Differential Correlates  of Intrinsic and Extrinsic Goals,” Personality and Social Psychology Bulletin,  22: 280-287 at p. 280. 

xv Abhishek Srivastava, Edwin A. Locke, and Kathryn A. Bartol. 2001. “Money and Subjective Well-Being: It's not the Money, It's the Motive,” Journal of Personality and Social Psychology,  80: 959-971

xvi Frank Knight. 1935. The Ethics of Competition and other Essays.  New York: Augustus M. Kelley, p. 66

xvii Tim Kasser and Richard M. Ryan. 1993. “A Dark Side of the American Dream: Correlates of Financial Success as a Central Life Aspiration,” Journal of Personality and Social Psychology,  65: 410-422 at pp. 417, 419.

xviii George J. Stigler. 1981. "Economics or Ethics?" In S. McMurrin, ed., Tanner Lectures on Human Values,  vol. II. Cambridge: Cambridge University Press, p. 176.

xix Bruno S. Frey. 1998. “Institutions and Morale: The Crowding Out Effect.” In Avner Ben-Ner and Louis Putterman, eds., Economics, Values, and Organization.  New York: Cambridge University Press, 437-460.

xx Ibid., pp. 448-454.

xxi W. Upton, Altruism, Attribution, and Intrinsic Motivation in the Recruitment of Blood Donors  (Doctoral dissertation, Cornell University, 1973). Reported in John Condry and James Chambers, “Intrinsic Motivation and the Process of Learning.” In Mark R. Lepper and David Greene, eds. 1978. The Hidden Costs of Rewards: New Perspectives on the Psychology of Human Motivation.  Hillsdale,NJ: Wiley/ Erlbaum, p. 71

xxii Stigler does not report the effect of payment on economists' behavior but he does say that they cultivate ideas which find a market (pp. 32-33), producing what people desire (p. 63), and preach what society wants to hear (p.33). See George J. Stigler. 1982. The Economist as Preacher and Other Essays.  Chicago: University of Chicago Press. 

xxiiiGerald Marwell and Ruth Ames. 1981. “Economists Free Ride. Does anyone Else?" Journal of Public Economics,   15: 259-310. Apparently Adam was not familiar with further contrary evidence in T. D. Stanley and Ume Tran. 1998. “Economics Students Need not be Greedy: Fairness and the Ultimatum Game,” Journal of Socio-Economics,  27: 657-664; Amanda Bennett. 1995. “Economics Students Aren't Selfish; They're Just Not Entirely Honest.” Wall Street Journal,  January 18, 1995, B1.



Prof. Lane’s most recent book is The Loss of Happiness in Market Democracies.  For contacting, please use: Robert E. Lane, 558 Chapel Street, New Haven, CT 06511, USA or





Robert E. Lane, “The Economist’s Long Farewell”, post-autistic economics review, issue no. 15, September 4, 2002, article 6. .