If you have already read my blog posts about wisdom, then you know that wisdom – as a general trait – is related to well-being. My focus here, however, is on a very specific type of wisdom: Consumer Wisdom. So, good questions to ask include whether Consumer Wisdom in particular is related to well-being and which different types, or measures, of well-being is Consumer Wisdom specifically related to? These are actually two of the fundamental research questions that my co-authors and I have been focused on over the last few years. I’ll spare you the academic detail and will simply summarize some of our key results to help you understand why it’s worth your time 1) to understand what Consumer Wisdom is, 2) to gauge how wise a consumer you are today, and 3) to invest some time and energy to become an even wiser consumer (regardless of your starting point).
It would be relatively easy to simply show that there is a positive relationship between Consumer Wisdom and well-being. The gold standard in research, however, is to show that something predicts something else even while also considering other known predictors at the same time. For example, you might find evidence that high school students who wear a certain expensive brand of shoes do better at math on the SAT, on average, than other students at the same school who don’t own the same shoes. Sounds ridiculous, right? But these sorts of “spurious correlations” are reported in the media all the time as if they were fact and then echoed across social media platforms as decontextualized sound bites (which draws attention and sells digital ad space – but that is fodder for another blog).
Back to the fancy shoes… The question is whether this apparent relationship holds when you “control for” other known predictors of SAT math scores, like family income. It wouldn’t be terribly surprising to find out that when you also include family income in a predictive statistical model along with owning expensive shoes, then the relationship between the shoes (a possible predictor) and SAT math scores (the predicted outcome) disappears. In this case, what was really behind the hypothesized “shoe effect” was actually an “income effect” (wealthier families may simply have more money to pay for tutors and SAT prep courses).
However, if we can show that something predicts something else – even while considering other known predictors – then we have demonstrated “incremental predictive validity.” Or, more simply, we have shown that the additional predictor provides incremental (i.e., additional) explanatory power. Maybe this is more detail and lingo than you wanted, but a pet peeve of mine is online wiz-kids and supposed gurus full of ideas and claims without robust evidence. I want you to feel confident in what this Consumer Wisdom stuff is all about (and also learn to be a wiser consumer of online media).
So, back to Consumer Wisdom. If we want to show that Consumer Wisdom predicts well-being – above and beyond other known predictors of well-being – then we first need to identify what those known predictors are. In our research, we included three fundamental, known predictors of well-being:
- “personal relationship support” (having friends and family that support you)
- “job satisfaction” (having a job you enjoy and a workplace that makes you feel valued)
- and “health” (physical health and the ability to do what you want to do physically).
Next, we needed to consider different types of well-being (i.e., our predicted outcomes; for more on this see my blog on wisdom and well-being). We addressed four different types of well-being:
- “thriving” (you feel appreciated, energized, and successful)
- “life satisfaction” (the conditions of life are great and you’re getting the important things in life that you want)
- “meaning in life” (you feel a strong sense of purpose)
- And, finally, one very practical measure, “perceived financial well-being” (you don’t feel stress about money and your financial future is secure).
Ok, so, the question is whether Consumer Wisdom is positively related to well-being, even while controlling for all of these other known predictors of well-being. And, of course, we also need to control for all of the standard demographic predictors of well-being including gender, age, education, and income.
To study this, we recruited hundreds of participants across the US – and we intentionally recruited participants to match the US demographic profile based on the latest census data. This means that we included participants in proportion to their relative numbers in the US so that we could generalize our results to the US national population. These demographic dimensions included gender, age, household income, education, geographic region, race, and ethnicity.
What we found even surprised us a bit. We expected to find that Consumer Wisdom is positively related to at least some of the measures of well-being, like feeling less stressed about money. However, we found that Consumer Wisdom predicts ALL of the measures of well-being that we included. What this means is that even after considering the supportive relationships in your life, your health, your job, and your financial situation – your well-being still significantly depends on your habits as a consumer.
Different people with similar lives (with respect to relationship quality, health, job satisfaction, income, education, gender, race, ethnicity, etc.) can have significantly higher (or lower) levels of well-being (in all its forms) depending on their habits as a consumer.
Across our nationally representative sample, our research participants with higher Consumer Wisdom scores…
- felt less financial stress and were more confident about their financial future,
- were more satisfied with their lives,
- felt a greater sense of purpose and meaning in their lives,
- and they felt a greater sense of thriving (they felt more alive!)
Most of us know many of the things that science and common sense tell us about living well: cultivate great relationships with friends and family, get a good job (which could include working at home), eat well, exercise, and get enough rest. And though we often hear advice about how to make money and how to invest it, we seldom get any useful guidance about when and how to spend our money in ways that promote our well-being. Yes, there is some good advice out there about budgeting, but that’s kind of like telling someone to exercise a certain number of minutes each week without helping them understand when and how to exercise in a way that is most likely to promote their physical and mental health and that they will stick with, and even love. Worse, when it comes to when and how to spend our money, we are bombarded by the messages of a marketing-dominated economy that tells us to buy more stuff and buy newer stuff, with empty promises about how this will lead to shinier, happier lives. Which, of course, means that you need to work harder to earn more money, so that you can spend even more on stuff that promises to make you happier. If you recognize that this type of treadmill isn’t in your best interest, and you want to learn about how you can take control and really thrive, then read on….