2010: will 2009’s frugality stay?

This weekend, I listened to an NPR interview with managing editor of Real Simple magazine, Kristin Van Ogtrop.  It was about saving money, cutting back on your household budget and saving up to $5,000 a year (the full article is here).  Did you know that the average household in the US spends $4,000/year on groceries?  I wish….but I digress.

What struck me came at the very end of the interview.  Marketplace’s Tess Vigland started the wrap up, asking,”…frugality was really sexy in 2009. But I wonder, if things get better, this year, do you think that’s going to linger, is it going to become kind of old news?”

Ms. Van Ogtrop’s response?  I’ll summarize:    For many people, it’s been kind of an interesting reset moment.  They look at their spending and they look at the way they live and they’ve kind of been given this cultural permission to cut back, and it’s been sort of liberating.

So here I sit wondering what this observation says about us, Americans, as individuals and as a nation.  The rational, measured, economic being in me prickles and feels all mean, thinking to myself, well that’s ridiculous.  People really got into financial trouble because they weren’t able to resist the cultural pressure to spend more than they could afford?

But as is usually the case, a little self reflection is always helpful.   I’m reminded of the several articles this year I’ve come across talking about social contagion.  The bottom-line conclusion from these studies shows that health and social behavior is directly correlated to your social group.  If your friends smoke, you’re more likely to.  If your friends are overweight, you’re more likely to be.  At first, I thought this was counter intuitive.  How can my friend’s eating habits make me fat?  But I’ve seen it in myself in other ways.  It usually starts with small things.  When my friends are willing to pay $3.oo for a cup of coffee, it starts to seem normal to me.  Then it works its way toward larger things.  I know I should be perfectly happy with the New England colonial I live in, but as my friends around me expand and remodel, discontentment with my own situation sets in and I have to actively remind myself that we’re doing just fine.

The thing about social contagion is that it seems to work more strongly in a negative direction.  It’s so much more fun to spend a little more than you might have because the people around you are doing it.  In the positive direction, relying on social pressure can work with things like dieting with a friend or signing up for a gym; but we all know that these things are much harder to keep up.

Sadly, with wealth, it doesn’t work quite the same way.  If your friends are wealthy, it doesn’t seem to make you wealthy, it just makes you wish you were, and perhaps makes you spend money as if you are.  To think of the economic boom and then collapse in terms of social contagion, those around us who were genuinely successful spooled the market up to make it seem as if we should all be joining the party, even if we couldn’t really afford the champagne.

If the outcome of the recession leads to “giving us cultural permission to cut back” as a nation, that to me is a good thing.  It makes the whole concept of living more environmentally consciously  as a nation a much more realistic prospect.   It means our economy might finally start to move in a more sustainable direction in terms of consumption and ultimately greener living.  With the cultural permission to cut back, people can more happily return to the ways of their grandparents (see HuffPost).  “Cutting back” usually means getting back to basics, reducing consumption, reusing things and recycling what’s left over.  Wait a minute…reduce, reuse, recycle….that’s pretty catchy.  I wonder if I can use that?

As with dieting and exercise, cutting back is harder than cutting loose.  Time will tell if the cultural norm has really shifted in terms of consumerism and consumption.  It feels as though we’re still in the hangover stage.  The question is whether as we sober up, we’ll listen to ourselves and cut back permanently or get right back out there and party hard when given the chance.

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**Hours after my original post, I also came across this in the NYTimes : In Recession, Americans Doing More, Buying Less.  The question is, will people change their behavior permanently??

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