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Sorta Random Sunday: Psychology of the American Consumer

One of my favorite books is The Psychology of Money by Morgan Housel. I highly recommend it. This post is about the epilogue of the book in which Housel describes the evolution of the American consumer.

It’s really fascinating and was something I had never really understood or thought about understanding.

I’ll do a poor man’s job of summarizing what he writes about in his epilogue here. I know that this opened my eyes to a lot including my own habits as an American consumer.

Maybe it will do that same for you…

Evolution of the American consumer

american consumer
It begins…

The story starts during the Great Depression

  • A whole generation of Americans completely impacted by a total crash of the economic system.

Next came World War II

  • The economy bounced back as many factories converted to war time suppliers and manufacturers.

After WWII is where the real key is though

  • Economists worried about what would happen when thousands upon thousands of GIs returned to America – Where would they find jobs? What would they do?
  • Well, what happened is a credit boom. The GI bill was passed and GIs, along with most Americans, had access to fast, cheap, borrowed money. And they used it to buy consumer goods. And GIs worked in industries that created these new consumer goods.
  • So, at this time, income and access to money grew tremendously. And it grew pretty equally between the socioeconomic classes.
  • Media also began to grow, including the television. Via this medium, the American consumer could view and compare lives between themselves and their peers.
  • Due to this, a cultural perspective began to develop. Lower and middle class folks began to expect the ability to live very similarly to their upper class peers. And this was, for the most part, true – remember, incomes grew pretty equally!

But then some other stuff happened…

  • I’m gonna flash forward past a lot of stuff here….like Reagan…and quantitative easing…etc.
  • The end shot is this: In recent years, since the Clinton administration, income for the American consumer has grown tremendously.
  • But…and this is a big but…it has not grown equally. The rich have experienced a much greater gain in income and access to money compared to the lower and middle class.
  • Meanwhile, social media has made comparing lifestyles easier and more contagious than ever.
  • And this generation of the American consumer wasn’t raised by those experiencing the Great Depression. Instead they are raised by the generation who developed the cultural perspective of egalitarian consumerism regardless of income…

So you can start to see the problem…

Basically, we have unequal increases in income and access to money with a persistent philosophy of consumer equality combined with constant in your face comparisons with our peers…

Enter the modern American consumer…

Now I do want to point out that I am not saying that any of this is right or fair or the way it should be.

I’m just pointing out that it is. That’s all that is important in this argument.

And doctors fall into this trap maybe even more than most


Because we are high income earners. But most of us are not mega high income earners.

But that is what we want to live like. We see it all the time. Heck…it’s almost what the world expects of us as a doctor…just take the doctor car as an example

So what can we do?

  1. Recognize the problem of over-consumerism
  2. Protect yourself from it by creating your own “why”
  3. Create financial goals and priorities in your financial plan
  4. Spend intentionally on things that truly bring you joy

What do you think? Where do we all fit in among the American consumer? How did we get this way? What can we do? Let me know in the comments below!

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    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected].

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