As social researchers begin to piece together how Americans are being affected by the recession, they're uncovering an interesting trend: Even people who have not been hit hard by the downturn—those whose jobs and incomes remain unchanged—are pulling back on spending. They're clipping coupons, abandoning shopping malls and planting backyard gardens. A survey by the National Gardening Association found that 7 million more households plan to grow their own food in 2009—a 19 percent increase over last year. In April, the national savings rate jumped to 5.7 percent of disposable income, up from the historically low average rate of 0.5 percent a year ago. Americans are even being less wasteful: Landfills nationwide report incoming trash is down by as much as 30 percent.
What's behind these changes may be a fundamental, long-term behavioral shift, say some psychologists, a move away from years of conspicuous consumption and credit-fueled extravagance. In fact, the economic downturn might have a silver lining for the country, forcing Americans to reassess their values and actions, some say.
"As incomes rise, there seems to be this infatuation with stuff, and stuff does not make us happier or better people," says Paul Zak, PhD, founder of the Center for Neuroeconomics Studies at Claremont Graduate University. "Recessions remind us of this and refocus us on what's most important: things like family, friends and walks in the woods."
Yet Zak, and other psychologists also say that the trend toward frugality may not last. Goodwill may be the new Gucci right now, but once credit starts flowing again, we could fall back on our old, bad habits, racking up credit card debt and lusting after material things.
"My sense is that three years from now it will just be life as usual," Zak says.
Whether or not Americans are truly on the cusp of a fundamental social shift, psychologists are shedding light on how we might recover as individuals and a society. Their research points to how the recession may stimulate lifelong positive changes, including less greed, materialism and egotism and more community-building and cooperation.
The next greatest generation?
Late last year, social psychologists W. Keith Campbell, PhD, of the University of Georgia, and Jean Twenge, PhD, of San Diego State University, were writing a book on how the easy credit and other cultural factors helped fuel the country's fixation on material wealth, physical appearance, celebrity worship and attention seeking. Then an interesting thing happened: Americans stopped spending as much, particularly on items or services the authors deemed as feeding narcissism, such as cosmetic surgical procedures, Hummers and "McMansions."
"Even rappers started wearing less bling," Campbell says.
It seemed the bursting of the credit bubble had "sucked the oxygen out of the system that narcissism needs to survive," they wrote in their book, "The Narcissism Epidemic: Living in the Age of Entitlement" (Free Press, 2009). Yet while Campbell admits materialism appears to be waning, he's not yet ready to declare a wholesale change in behavior just yet, mostly because several other forces, including the media, the Internet, parenting and education, have remained the same.
"If we saw a push for schools to start teaching financial education or if the media became less focused on shallow fame, I'd start thinking the changes would be more permanent, but I don't see it," Campbell says. "It seems more like the brakes have been put on the culture, but the fundamentals haven't changed."
New York school psychologist Susan Lipkins, PhD, who has been providing psychological services and seminars for recently laid-off Wall Street bankers and their families, disagrees. She argues that the recession's severity has ushered in widespread cultural changes, a shift that may throw into question fundamental assumptions of the American dream—buying a house that rises in value, holding a job with security, building savings and a better future for the next generation. Depending on how long this downturn lasts, she says, children raised during this recession may, out of necessity, be less materialistic than Generation X.
This shift, she says, may not be all bad. "We're realizing that we have to pull together as a community because we have no choice," Lipkins says.
Neighbors, for example, are pooling their funds to buy expensive gardening tools or rarely used kitchen appliances to share, according to a May 25 Associated Press article. An April 23 piece in the Atlanta Journal Constitution reports dry cleaners are offering free services for New York job-seekers and neighbors in Ohio are providing free child care for parents going to interviews.
Although the renewed interest in community associations, service organizations and programs such as Teach for America can partially be attributed to recent legislation that expanded national service programs, Americans are realizing that building connections with others may be the best way to survive these difficult times.
New research indicates Campbell and Lipkins may both be right. In February, social psychologist David Sleeth-Keppler, PhD, of SRI Consulting Business Intelligence, conducted a national telephone survey of 1,556 households to get a sense of consumer attitudes, behaviors and motivations related to the financial crisis. He found that the type of emotions people experienced when they thought about the economic crisis affected their financial behavior. Those who reported feeling anxious about the economic crisis cut back on their spending and invested more in their retirement accounts, even if they hadn't been greatly affected by the crisis. Yet those who reported feelings of sadness or disappointment over the economy had not dramatically cut back on shopping and had even reduced their retirement investments. This difference, Sleeth-Keppler says, according to years of social psychology research, indicates that people operate under different consumer mindsets, which causes them to feel and often act differently. Those who feel agitated by the economy are apt to define their goals in terms of meeting moral duties and obligations and preventing bad things from happening, he says, whereas those who feel sad often strive instead to reach ideals and promote good things in their lives. It's probable, he adds, that the tense participants will continue to be frugal when the recession ends. And as for those who feel sad?
"They're the ones who may be more likely to eventually go back to the conspicuous consumption we once had," Sleeth-Keppler says.
History, too, may offer insights into how Americans may be affected by the economic crisis. Fordham University sociologist Lloyd Rogler, PhD, says that the economic downturn—and the events that led up to it, including 9/11 and the prominent cases of corruption on Wall Street and among politicians—may provide the incipient phase of a new generation, as the Great Depression and World War II provided the previous "great" generation. Based on his theory of generations, outlined in the American Psychologist (Vol. 57, No. 12), one of the most telling aspects of the recession will be how the crisis affects young adults who are moving toward independence. They may, for example, be less willing to invest in the stock market. They may also settle into a more modest standard of living or increasingly rely more on the community to survive. Or, Rogler says, they may turn cynical and develop a greater mistrust in government and a skepticism toward unregulated capitalism.
It's simply too early to know, he says, but "this period of transition in the life cycle is critically important."
Research on the Great Depression offers some clues. University of North Carolina at Chapel Hill sociologist Glen Elder Jr., PhD, spent years studying Americans who were born in the 1920s and grew up during the Great Depression. He found that the Depression—and World War II—had a profound effect on these individuals, not only in their formative years but throughout their lives. As Elder concludes in his book "Children of the Great Depression: Social Change in Life Experience" (University of Chicago Press, 1999), Depression-era children and adolescents accelerated their transition to adulthood by taking on work roles, household responsibilities and the daily problems of family life under economic pressures. They were set on a lifelong path toward frugality and conservation.
"If Americans emerged from the '30s with a strong desire to avoid debt, what is happening now among people today who have lost homes and livelihoods to the financial crisis?" Elder asks. "However we answer this, we need to keep in mind that an economic downturn affects people in different ways, depending on their life stage."
Save now, dream later
Even if we aren't on the cusp of widespread social change, many people will take valuable lessons from the current recession, experts say. Social psychology research, for example, shows that one way to reduce the negative behaviors that often stem from narcissism—such as hostility—is to promote connections and commonalities among people. Research by Campbell and colleagues Sara Konrath, PhD and Brad Bushman, PhD, published in Psychological Science (Vol. 17, No. 11), found that alerting those high in narcissism of similarities with others—such as a shared birthday or rare fingerprint type—reduces aggression. These findings, he says, fall in line with studies by University of Kansas social psychologist Daniel Batson, PhD, which show that promoting connections among people increases empathy and leads to more helping behavior.
"What you'd think has to happen then, if interpersonal connections can be forged around the economic collapse, some of the consequences of narcissism will decrease," Campbell says. "Theoretically, Obama's push for volunteering could work because it may bring people together rather than push them apart."
Psychologists, Zak says, can also help turn hard times into "teachable moments," encouraging people to examine whether their behaviors match their values. "It's not a big leap to go from fiscal belt-tightening to looking at your life and asking, 'Is this really the job I want to be in for the rest of my life?'" he says.
As for the American dream, Zak and Campbell say it's still alive and well, but that the increasing credit available over the last two decades had allowed Americans to live out those dreams without feeling responsible for paying for them. In May, for example, the Mortgage Bankers Association reported that 12 percent of all U.S. home loans—about 5.4 million mortgages—were delinquent or facing foreclosure proceedings, the highest level since the association started measuring 37 years ago.
"Many of the elements of materialism are so seductive," he says. "The recession many be an opportunity, unfortunate as it is, to step away from all of that for a little while."
It may also be a chance, he says, to recast the American dream, or maybe even propose a new one, that focuses not as much on owning a large home but on being part of a vibrant, interconnected and sustainable community. At the very least, he says, this crisis may cause the current American dream to revert back to something we plan for and work toward, rather than live in and pay for later. And that may be a very good thing.