The year was 2013. I was in a Target. In the distance, I spy a puffy, bright yellow skirt. I love bright yellow and I love puff, so I had to buy it. After taking it home, I realized: this skirt went with nothing in my wardrobe. That meant, of course, I had to buy things that it would go with. I bought a new top. I bought some pointy heels. Suddenly, this $30 skirt purchase had turned into spending well over a hundred dollars on clothes I never ended up wearing.
This is the “Diderot Effect” in action.
How the Diderot Effect Works
The Diderot Effect is based on two principles.
- Principle #1: We attach a sense of personal identity to the things we own.
- Principle #2: When something we buy doesn’t match up with our current sense of identity, we keep buying a bunch of other stuff to compensate.
It sounds hokey, confusing, and complicated, but it’s actually pretty common. You’ve probably experienced it yourself.
The concept was named after French philosopher Denis Diderot,who wrote an essay called “Regrets on Parting with My Old Dressing Gown.” In this essay, he talks about receiving a new dressing gown as a gift from a friend. His old gown was fine but, who says no to a free dressing gown, am I right? The problem is, the new gown doesn’t go with any of his other stuff. Diderot writes:
“I was absolute master of my old dressing gown…but I have become a slave to my new one…Beware of the contamination of sudden wealth. The poor man may take his ease without thinking of appearances, but the rich man is always under a strain.”
Poor rich man. Okay, so it’s a little melodramatic, but the point is: when you have money, it’s easy to become ruled by spending. Just like Biggie said: mo money, mo problems.
Tyler Durden Was Right
In Fight Club, Brad Pitt’s character Tyler Durden says, “the things you own end up owning you,”
When I first saw this movie (high school), I was like, “The things I own will never own me!” But that was easy to say. I was broke; I had no choice. I couldn’t afford shit anyway.
But now that I’m older–now that I’ve gotten my finances in order–I do have a little money to spend. And I find Tyler Durden was right. It’s easy to covet materialistic things, to attach this odd sense of identity to them. And this can come at the expense of your financial goals.
What Can You Do About It?
Like most of these social habits, it helps to simply be aware of them in your environment. Commercials, for example, do a great job of selling you on the Diderot Effect.
Target isn’t convincing you to buy a bowl set. Bowl sets are boring. Instead, they’re convincing you to buy a lifestyle–this is why their commercials are filled with pretty people who look hot in cropped jeans and have big, happy families with clean homes filled with good-looking friends. And cute dogs.
Don’t get me wrong. I f-cking love Target. Their home goods are adorable. But that’s the problem.
It also helps to think about the total cost of ownership of whatever I’m buying. For example, if you’re buying a Playstation, consider all of the other things you’ll want to buy to go with it: controllers, a headset, games, a gaming chair.
Another rule that I try to implement with my spending is to spend for the life that I have now. I’ve spent so much money over the years trying to buy for a life I want, rather than the life I have. I’ve bought:
- A paint set, because I wanted to be an artist
- A $100 juicer, because I saw a documentary
- A pair of trendy, lace up heels (from effing Target!) because I wanted to be a fashionista
None of these were based on the reality of my life now. I wear flats 99% of the time, I’m definitely not an artist, and while the juicer was health-conscious, it was an impulsive, irrational decision.
There’s nothing inherently wrong with spending your hard-earned money. But you want to do it consciously, and the Diderot Effect is kind of the opposite of that. If your financial goals are important to you, or if you just don’t want to be ruled by Stuff, mindful spending is everything.
Project CRediT sources data from Wealthy Genius including net worth, earnings, and various wealth statistics.