Richard Thaler's "Misbehaving" Volume 2 // Part 1

The next four blog posts, which I will be calling "Volume 2" for their disconnected nature from the first four posts and the difference in the core nature of the blogs themselves. Whereas in the first volume, I sought to summarize and explain the major points and ideas portrayed in Richard Thaler's Misbehaving, in this section, I will seek to connect the book and its ideas to four major ethical implications. Due to the book's relation to economics and the business industry, all of these ethical issues will also be related to these. For reference, here is an image and LINK to the book. 

For my first ethical issue, I will be discussing the eth
ical implications of consumer theory and relating to our Biblical Heritage class discussion about consumerism and its environmental impact on the World. Additionally, I will be drawing from my other blog posts when it comes to explanations and definitions, but I will reference them as appropriate. Furthermore, The Econ will be making additional appearances as needed. For the uninitiated, an Econ is simply an imaginary person who embodies the perfect optimization that is assumed within Economic theories. This person always picks the best option and does not let anything but logic guide his decisions. Obviously, this is not how the real world works, but for the sake of explanation The Econ can be used to help smooth out a lot of what makes economics so difficult to understand in the first place. When appropriate I will also be comparing The Econ's behavior to what would occur with typical day-to-day people who don't optimize every decision they make like a machine. 

First off, what is Consumer Theory? In its most basic form, consumer theory is simply the study of how individuals decide to spend their money. There is of course a far more complicated and verbose definition but I will try and summarize as achievable. Whenever someone chooses to buy product A over product B for X reason, this is consumer theory. Instead of macroeconomics, consumer theory comes from microeconomics, meaning it has to do with the small decisions made by people based on their personal preferences and financial restraints. Consumer theory is very important in today's capitalistic American society as it provides the backbone of why marketing and advertising work in the first place. It can also provide much of the logical core for why the aforementioned marketing can be abused and manipulated for less than perfectly ethical reasons and motives. Furthermore, it must be stated that consumer theory is not a perfect science as humanity doesn't operate like a machine. To make what are essentially educated guesses about predicted behaviors, Economists must make several assumptions about humans and their innate instinct to make certain choices. For simplicity's sake, I won't go too far down that rabbit hole but it must be said nonetheless. If you are still curious about consumer theory and the nearly limitless ways it can influence economics, please check out this ARTICLE  by Investopedia. It is very well written and helps to explain things in layman's terms. 

Let me now pivot to the idea that begins to build the unethical part of this discussion, consumerism. As defined by Investopedia, is "the idea that increasing the consumption of goods and services purchased in the market is always a desirable goal and that a person's well-being and happiness depend fundamentally on obtaining consumer goods and material possessions" (Investopedia). In other words, consumerism is the relatively recently introduced idea that more material possessions are always better and consumers should be pointed to accept that. Unfortunately, this means that producers are incentivized through higher profits and wider margins to persuade consumers to buy as much as possible and retain as little as possible to generate repeat customers. This inevitably leads to something called planned obsolescence, which is the intention and design by producers for their own products to break down at an accelerated rate in order to encourage consumers to buy additional products. 

The unethical implications can then be built by seeing what happens when these two ideas are combined. With consumer theory driving people to maximize their satisfaction and consumerism leading to an incentivization for margins at all costs, it is not hard to see how this system could become abusive and exploitative. Firstly, both systems do not have limits in the sense of floors or ceilings. Obviously, this is not intended as literal floors and ceilings but metaphorical ones denoting maximums and minimums for consumption. Without these limits in place, overconsumption of both food and products runs rampant, leading to a multitude of health and sustainability issues. 

Additionally, this overconsumption and use of consumer theory to influence customers can incentivize unethical production practices. In order to maximize margins and gain additional profit, many producers outsource manufacturing to locations outside the United States, most often India, China, Vietnam, and Taiwan. Unfortunately, these countries have very relaxed labor laws with some even allowing for child labor and the exploitation of workers. This means labor is cheap and therefore presents the perfect opportunity for companies looking to make an extra buck. 

Lastly, there is the environmental impact that we also discussed in our Biblical Heritage class. Similar to the point above, many foreign countries have relaxed and therefore exploitable rules and regulations related to the use of natural resources. This generates numerous problems for not only the country of origin but all of the world. As America has burned and chopped its way through the majority of our natural resources and regulations have been put in place, many companies have begun to look overseas for a solution. Many of these resources such as forests, water, minerals, and coal are finite and limited, meaning they can not sustain heavy depletion without an equal amount of replenishment. Forests and water sources can be regrown and refilled, but many mineral and metal sources are completely finite with no reliable way for humans to replenish these resources. Additionally, the harvesting of said resources can be just as taxing on the environment. Below is a lithium mine, where the mineral lithium is harvested for use in many modern-day batteries. PICTURE

As one can see, this mining and resource acquisition is devastating to the surrounding agriculture and environment, often leaving irreversible damage.  Mining and manufacturing also cause intense pollution and release toxins into the atmosphere, which cause global warming and irreparable damage. 

Investopedia. "Consumerism Explained: Definition, Economic Impact, Pros & Cons." Investopedia, 15 May 2011, www.investopedia.com/terms/c/consumerism.asp. Accessed 10 Nov. 2023.