How Bad Incentives Rule Modern Commerce
When consumers perceive themselves as unfairly treated, they’ll buy more…
Commerce is buying and selling products and services, along with whatever — physical, virtual, emotional, psychological, social, etc. — materials are needed to support such activities.
Ideally, from a buyer’s perspective, participation in commerce shouldn’t exceed personal needs. However, suppose an individual’s needs increase. In that case, they will need more income and will therefore need to expend more labor power to support such expansions — such as selling products, services, or (which is the most common path) one’s labor.
Whether the pursuit of “status” is an essential human need is debatable — social peers are necessary, but an ever-ascending social ladder (which is precisely what “the pursuit of status” consists in).
What’s less debatable, however, is that human beings often put their wants before their needs. The world of marketing science — particularly its growing coziness with psychology — has known and capitalized on this for decades.
Unfairness is a feeling that arises when an individual views themselves as having been slighted or as having less than they are owed relative to their self-perceived merits. We can talk about acts that are, in fact, unfair, but those are actions that reliably evoke such feelings.
Sometimes, victims of unfairness do not experience significant feelings of mistreatment or slight — sometimes injustice is so commonplace that it ceases to be felt as wrong, especially in the domains of money, commodities, and status-seeking, which motivationally, quite often takes the back seat to cherished friendships, hobbies, and even one’s health.
When consumers possess a self-perception of being mistreated relative to their social status (e.g., demographics; economic class; personal circle; work for circle; etc.), according to the March 2023 issue of the journal Psychology &Marketing, it significantly increases the likelihood of them purchasing a “unique product,” especially when such unfairness is felt in comparison to one’s peers.
This is a new empirical finding, but businesses have been exploiting the “fetishization of commodities” — as Karl Marx called it in Das Kapital — for centuries. All social media marketing through ads, reels, and clickbaity blogs is the cumulative intensification of such fetishization — that is why “in God we trust” is a hidden epithet printed on all American money.
It’s an expression of abuse because of its expressiveness, just as its manifestation in the form of curated content on social media is designed to produce these very feelings of unfairness in the minds of users and succeeds in doing so en masse.
How Much Do Consumers Buy for “Status-Seeking?”
Psychology & Marketing indicated that the relationship between status and the purchase of unique products is robust to the degree that the more unfairly treated people felt, the more likely they were to desire unique products.”
The expression “unique products” is a stipulation researchers make to describe things “as different and rare, are often highly valued as a symbol of social status.” Among peer groups, this may constitute a particular brand of clothing or even an iPhone — one will feel slighted (by existence? by God? who knows…) and, to compensate emotionally, will try to one-up everyone.
For instance, say all your friends have an iPhone with two camera lenses. This increases the odds (1) of you feeling insecure relative to your friends — concerning financial health, social status, and most importantly, reputation — and (2) of buying an iPhone that is considerably more expensive and with four camera lenses — even if this comes into contradiction with your concerns over financial health.
Researchers say this is “compensatory” when consumers experience status threats.” In other words, status-seeking is the fundamental motivation behind such purchasing behaviors, and according to Psychology & Marketing, what mediates this motivation is one’s self-perceived economic mobility.
Thus, when you break out your four-lensed iPhone to impress your lower-status two-lensed compatriots, essentially, you’re advertising the fact that your purchase was based on economic insecurity.
It is a psychological truism to state that the more one seeks to be a specific way, the more you’ll actually turn out that way, and this research presents us with an excellent example of this.
Likewise, it encapsulates an aphorism of Freidrich Nietzsche’s: “a bad conscience is easier to cope with than a bad reputation.” Even though attempting to embellish one’s reputation more likely dampens it, that does not stop people from making extraordinary purchases to quell their lack of psychological security concerning their finances.
How Companies Capitalize on Insecure Consumer Psychology
As references to historical philosophers indicate, these facts concerning human psychology have been known for quite some time. Researchers from Psychology & Marketing acknowledge this in corollary by stating that their findings have permitted scientists to declare it with analytical rigor.
The ways companies have capitalized on consumer feelings of unfairness and dwindling social status. By that token, insecure financial status is most pronounced in advertising and, in modern times, on social media.
Here’s a question some executives might ask in response to Psychology & Marketing’s newfound data: “How can we make things such that consumers feel as unfairly treated, relative to the social status of their peers, as is beneficial to our bottom line of maximizing revenue?” And no doubt some have asked this question, and others have obliged with responses of vulgar proportion.
What comes to mind here is the odd phenomenon of Andrew Tate and the general “manosphere” or “red pill community,” which, over the past year or so, has intensely targeted men — and specifically very young boys — on social media with content advocating for the abuse of women — either expressly or through implicature, depending on the grade-level of the “journalist” interviewing him relative to their newspaper or magazine’s stature.
Often misogynistic content — which predominantly consists of reels from podcast clips — has sprinkled in comments about how “poor you are” and other not-so-subtle (to me, anyway) encouragements to self-pitying lamentations among lonely or mentally ill men — and peculiarly some women — online.
Usually, things aren’t this explicit — though we should be worried (on educational and moral fronts especially) that even when things are, someone like Andrew Tate can cast a large enough net to catch millions of dollars worth of fish.
Instead, subtle gestures to unfairness are made in other advertising domains, where the marketers behind the scenes are savvier when it comes to inducing cognitive distortion in audiences. For example, one will see a soap commercial where in the first instance, the actor shares with you back-of-the-arm bumps, and in the second — obviously after using the soap — has lost the bumps and now has a woman clutching the smooth radial exterior.
It is possible to generate substantial revenues without going through all this commotion.
Yet companies that do ought to look at themselves — specifically at the company they are sharing with the business, like a sex trafficking pyramid scheme artist. The worst part about con artists is that they succeed in duping not most but a sizable proportion of those caught in their initial net, which is almost always broad-sized and thus easily recognizable by the bookish and non-materialistic among us.
Start-ups that look at Psychology & Marketing research surely don’t want to be spoken about in the same breath as Andrew Tate — unless it’s comparable to my current breath of critique. If they seek to exploit this data, they should look to concerns consumers have which are empirical and not exaggerated to the point of morbid manipulation.
A good example of this would be a supplement company that acknowledges that all fitness goals can be reached without taking any supplements. Having fitness goals presupposes feelings of unfairness — one feels they’ve been maltreated by life for having a certain bodily form, for instance.
Selling a supplement as the cure to life’s ailments — which no one ever says outright but which is implied constantly in advertising in a way that almost resembles piety — is an unethical capitalization on such feelings of unfairness. And while honesty in the domain of commerce will slow things down, it will drastically increase your credibility — and without any diminishment of conscience!
