Why do youngsters just starting their careers buy such expensive mobile phones? It is something I have never managed to get my head around to. In fact, anecdotally, in the world around us, we can see so many youngsters starting off on a salary of less than ₹50,000 per month, using smartphones worth more than ₹1 lakh. As an October 2023 article in the Mint reported: “In 2023, one-third of smartphone sales in India is projected to be financed, seeing a notable increase from 25% in 2022 and 18% in 2021.” In fact, higher the price of the phone, more the chance that it has been bought on a loan: “Half of the sales of the premium segment (above ₹30,000) is expected to be from easy finance options.”
The fact that loans are easily available is one factor driving people to take them on. Even assuming that these loans are genuine zero interest loans, why do people still buy expensive phones on loans? Smartphones are ultimately depreciating assets. A new and a supposedly better model will hit the market soon. So, why not buy a cheaper model instead with almost similar usage functions and invest the difference somewhere?
But then if people bought products just for their utilitarian value, some companies would never make the kind of money they make. Yanis Varoufakis explains this in Technofeudalism—What Killed Capitalism, using the example of Don Draper, a character from the TV series Mad Men. Draper, as those who have watched this series set in the 1960s, would know, works as a creative director in an advertising agency. In one episode, Draper explains to his colleague Peggy: “You are the product. You, feeling something,” while trying to explain to her how to think of Hershey, a chocolate bar that their advertising firm was trying to sell. Or as James Poniewozik later explained Draper’s line in an article in the Time magazine: “You don’t buy a Hershey bar for a couple of ounces of chocolate. You buy it to recapture the feeling of being loved that you knew when your dad bought you one for mowing the lawn.”
The point being that the product is not just the product. A good example here is that of men (almost always) buying a certain kind of motorcycle—which doesn’t just get them from one place to another—it also helps them project a certain image—perhaps macho or someone who loves travelling—among people around them. Or in quite a few cases, the act of someone buying an electric vehicle, other than projecting an image of being environmentally conscious—which the individual genuinely might be—also helps in projecting themselves as being cool. They don’t drive those gas guzzlers. Of course, the chance is that the electricity being used to charge the batteries in such cars, might very well be produced by burning coal, but that doesn’t bother them.
A similar dynamic is at work among those buying the pricey smartphones. It helps them project a certain amount of coolness and the fact that they have arrived in their lives, something that a cheaper smartphone with similar functions cannot project. Also, if everyone around them has an expensive smartphone, then it’s an effort to just fit in. In that sense, an expensive smartphone is also a play on a person’s self-esteem.
The trouble is that it doesn’t end with buying just one expensive smartphone because once you have bought one you are more than likely to keep buying newer models which will keep coming along at regular intervals. You will be riding the hedonic treadmill; the treadmill doesn’t get you anywhere and you keep walking at the same place. And this is true not just for smartphones but several other products. It applies to cars as well. And as Michael Kemp writes in The Ulysses Contract: “It applies equally to clothes, houses and all manner of trinkets.”
And buying just one is never enough. As Kemp writes: “So, you buy the thing. It could be a nice wristwatch, a beautiful piece of jewellery, a new car, a boat, or a bigger, newer house. The problem is that, once the thing is obtained, the gnawing feeling invariably returns.”
The point being that firms have managed to put a price to our feelings and we keep paying for it, over and over again, leading to a situation where quite a few of us don’t end up planning our personal finances well, resulting in meagre savings, which make things difficult in times of a financial emergency. Dear reader, if this is how you have been living your life, then the hedonic treadmill is something worth thinking and being worried about.
Vivek Kaul is the author of Bad Money.
