will people change?

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One of the questions we discussed at the latest Marketplace Money segment interview I did with Jim from bargaineering.com and Lynnae from beingfrugal.net was whether this crisis would make people change their money habits. I offered up my opinion that if the Great Depression didn’t permanently change habits for the long term (and it didn’t – just for one generation) – why would the Great Recession?

I’d like to think that people (including myself) are responsive enough to negative stimuli to stop certain behaviors.  Eat too many Doritos?  Get fat.  Therefore, don’t eat Doritos.  Short term tasty gain is outweighed by increased clothing costs, health costs, unattractiveness opportunity costs, etc.  Yet you don’t see people laying off Doritos.

I’m sure that all the statistics bear out the fact that in the short term people are massively increasing their savings and paying more attention to their retirement savings, practicing frugality and laying off the Wii purchases. Well and good.  Will that behavior still be the norm in 2011?  Check back with me then if I’m wrong, but I don’t think so.  I think within one or two years we’ll be back to the same insane treadmill, and we’ll be inflating the next bubble.  Dot coms and real estate are played out, so maybe it will be biotech… green energy… whatever it is, someone will pump it up and reality will deflate it.

If you think people are capable of change, just look around at the five people closest to you. I am willing to bet at least two of them have terrible habits that they will not (or cannot) change.  You can’t blame us.  I have horrendous fears of the future, for example.  It’s a part of my nature by this point in my life.  I can’t stop worrying about the future any more than I could forget how to ride a bike.  But the same thing is true of personal finance.  If you think that the crisis is going to permanently change spending habits, I have a bridge that runs from Manhattan to Brooklyn to sell to you.

I believe in the human race – it’s a fundamental part of my theology. I think humans are basically good and strive to improve, and that the race – as a whole – is moving toward a more (but never completely) perfect state.  I’d like to think that this crisis is the starting point for the evolution of a “new thought” in money – people will be more frugal, reject consumerism, support sustainable manufacturing, etc. and etc. ad nauseum.  Will they?  I doubt it.  I know from my own experience that wishing for change, and embracing that change short-term, are a long way from living the change long-term.  It’s possible – but, I think, not likely.

18 comments

  • I agree, i don't think most people will change, it's all about the mentality and if you don't fully understand what can really happen then it will be tough unless things and your decisions affect you.

  • Depressing =P

    But then I just need to look at the mirror to see two people's worth of bad habits ^___^

  • I think that you're right on with your assessment of people. Most change is just short-term. I remember right after 9/11, there was such a selflessness practiced by so many people, that I thought this might be the one good thing that came out of the horrible tragedy. Small problems were overlooked, and it seemed we were all on the Honor System. The goodwill lasted for a few months. Then, people were back to giving each other the finger again over small social infractions. I think people will tend to fall back into old, comfortable habits, even if they are bad habits.

  • I agree; I think most people will go back to their old ways after this “crisis” has passed. That's good for people like me — who have been frugal for years and need the consumers to consume again. Then I can buy their barely used stuff at their garage sales for pennies on the dollar.

  • No way this makes the majority of people become better at personal finance. The pain is still a long way off for some people. However, if this does get worse and last longer, and there are indicators the “green shoots” are dying, it has the possibility of at least teaching the generations currently alive. Though, I wouldn't bet on it.

    Also, unlike you I don't have much faith in humanity, so we have a better chance than I would prefer of finding a new dark age.

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  • I'm a big Wayne Dyer fan and he has a new book Excuses Be Gone and new PBS series. He said, “Never underestimate your ability to change yourself. And never overestimate your ability to change others.”
    That hit home with me, as I'm a big time frugalista and find myself not quite understanding people who aren't and (egads!) feeling like I need to change their behavior.
    Then I heard Dr Dyer and I literally sighed.
    I can control me, my habits, my spending.
    But changing humanity as a whole
    I'll leave that to someone else.
    Love this post- an excellent read!

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  • Changes are most of the time necessary and effective way to walk along time.

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  • I like to hope that this is the beginning of change. A few people may change, but most won't. That's how change starts though. A few people do something different, and then a few more and a few more. Whether it will pick up momentum and eventually change the way Americans spend money or die a sad and lonely death is up for debate though. I fully intend to work on convincing as many people as possible while the subject is popular though.

  • I have wondered the same thing and like to think my new habits are permanent. I say that because I have educated myself about money, spending, and enoughness more in the past 4 months than in all of my 43 years. This new awareness feels like my truth. I am clear about debt, saving, budgets and when I'd like to stop being a slave to a paycheck, etc. My eyes have been opened, albeit via fear, but this new awareness is liberating.

    • @Vicky: Congratulations! I certainly hope that you are the exception that proves the rule – which, I suspect, you are (the exception).

      But maybe more people are becoming exceptions, in which case something good HAS come out of the current financial mess.

  • First time visit here, I enjoyed your post, Steve.

    I think it will take a much greater catastrophe for people to change (majority if not everyone).

    I sincerely believe the one thing that is required for people to change forever… is to embrace that we are both capable of good and evil. We ARE capable of good… but also evil. When we accept and become aware of the possible evil that we are capable of, only then we can take actions accordingly toward goodness.

    Being good ONLY for the sake of goodness, or righteousness without awareness of the possible evil, often do more harm than someone who is deliberately evil.

  • Human behavior is pretty consistent in the broadest contours, but it is responsive to the incentives (and punishments) that society provides for certain behaviors. Sure, Great Depression behavior didn't outlast the Depression itself, but we also didn't have asset bubbles from then until the 1980s. Why? Because we had strong, effective regulations that curbed excess speculation and limited self-dealing. We also had more of a “stakeholder” view of corporations compared to the “shareholder” view that prevails today. These things matter just as much as our impulses.

  • Human behavior is pretty consistent in the broadest contours, but it is responsive to the incentives (and punishments) that society provides for certain behaviors. Sure, Great Depression behavior didn't outlast the Depression itself, but we also didn't have asset bubbles from then until the 1980s. Why? Because we had strong, effective regulations that curbed excess speculation and limited self-dealing. We also had more of a “stakeholder” view of corporations compared to the “shareholder” view that prevails today. These things matter just as much as our impulses.

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