LUXURY FEVER

A scientific attack on luxury that, though a little preachy, is not just an ascetic diatribe. Despite the truism that you can’t buy happiness, most people believe more money will make them happy. The reason for this self-deception, Frank (co-author with Philip J. Cook of The Winner-Take-All Society, 1995) argues, is that unlike the hypothetical independent agents of economic theory, real people compare themselves to others when formulating desires. Indeed, externally derived indicators of what we “need” are so powerful in shaping choices that “on the best available scientific evidence, we seem not to be spending our money in the ways that would most promote our own interests.” Consideration of what truly makes people happy would lead to, for example, buying smaller homes and less expensive cars and diverting the resources saved into “less conspicuous forms of consumption,” like more time for family and friends. Questioning the wisdom of working longer hours to facilitate buying more expensive toys and thereby sacrificing the time to play with them is nothing new, of course, but what sets Frank’s effort apart is his refusal to be a moral nag. Rather than beating us over the head with the puritannical strains of American culture, he presents systematic evidence that conspicuous consumption fails to achieve its intended goals. Having made his case that opulence at the top of the economic pyramid is skewing individual decisions throughout society in objectively unfortunate ways, he then proposes a progressive consumption tax as a way to rein in spending on luxuries by the rich. He closes the volume with a vigorous argument against trickle-down economics and for the proposition that progressivity embedded in a consumption tax will invigorate the economy. The chances that his ideas will be widely embraced are, of course, approximately equivalent to the chances that manufacturers will stop using human envy to sell their products, but they are nevertheless worth considering.