12 August

I'd call myself a frugal person. In an era of debt-funded orgies of consumption, that tends to make you look 'cheap' or 'tight'. But it's not about saving money, it's about a whole way of understanding life. How people manage their money is a psychological thing as much as an economic thing. Economics is a branch of psychology. The reason we get financial crises is because we get waves of what is called 'irrational exuberance', where peoples' lives start to be run like a mini-casino. Talking to people just recently about how they shop for groceries, and being surprised that many pay no attention to price at all. And eating out and seeing people pay $25 for a hamburger and chips without blinking. This isn't really about money, it's about the psychology of consumption, how happiness and sense of identity starts to become defined by what you buy and own. It's about status and identity. Also as the article notes, because the majority of people have gone backwards in terms of wealth in the last 2-3 decades, frugality has changed. You won't get that wealth back by counting the pennies (you'll need to join a union instead). But the status economy is one we're all living inside, and we don't look at the psychology of it enough I don't think.