You cannot predict consumer purchasing by looking at buying behavior from an economist point of view. Their way of abstracting the buying behavior as that of a rational individual driven primarily by personal needs, instead of looking at it from the complex social web perspective in which we actually make buying decisions, is just not realistic. As with many complex systems, you cannot understand, nor predict, a large social group’s buying behavior by abstracting the individual members of that group and studying their individual buying behavior as if they were rational players who are not influenced by their environment and the behaviors of others.
An interesting book covering this topic, which happened to be my first Kindle purchase, is : The World of Goods: Towards an Anthropology of Consumption. Authored by Mary Douglas and Aron Isherwood – it nicely contrasts the anthropological way of looking at consumption with the economic view.
A good example is to imagine what a small island might look like if it were promoted as a luxury retreat. What kind of stores would you expect, what kind of display/status purchases would people make, etc. Now imagine that same island, with the same people, after a natural disaster, or as they are all getting older, and now influenced by a deep religious movement. The whole island would look differently, people would buy differently, the type of stores that would be there would be different, etc. That is not something you would be able to predict based on the individuals.
Communities impose constraints on the individual members of that community. In some communities it is not ok to buy certain things – think buying fur coats in green communities. In other communities, people will buy stuff to exclude others from their community – think high roller communities who will make you feel bad if you don’t have your own jet, or a biker community if you do not have all the appropriate paraphernalia.
As the authors of the book suggest – “the collapse of a community frees individuals, and thereby affect inflation, spending and saving.”
Now isn’t this exactly what just happened with the mortgage market meltdown? In the past you would have bought your mortgage from a local banker, or a community member you knew. Part of the buying behavior would have been influenced by the community, which would make sure that you did not buy more than you could afford. And if you did, or hit hard times, you would have worked really hard to repay the loan one way or the other. Now, with no community to guide this process, many people bought stuff they could not afford, and many are walking away from their situation with hardship, but without the guilt feelings that they would have had in their community in the past.
Another interesting assumption from the book – which I barely started reading – is that “there is a comprehensive, fundamental set of human wants which concerns control of other humans (and also escape from being controlled).” Now this explains way more than political buying decisions.