You Are Eating Too Much McDonalds: Under-consumption and Over-consumption

 (Photo by Gabriel Li)

Do you eat very little vegetables and fruits? Do you smoke or drink a lot? Do you not exercise? You know that is not good for you, right?

Sorry for sounding like your mom or grandma. This is to bring up one point: most of us do not choose the optimal or the "right" amount of consumption of goods/activities.

It is no surprise that many of us eat too little vegetables and fruits, exercise too little, drink too much sugary drinks, smoke or drink too much, etc. This is what I call "under-consumption" and "over-consumption". But this is something that is mostly ignored in mainstream economics.

Externalities

Economists talk about under-consumption and over-consumption a lot too. But it is usually about externality. When your neighbor grows some beautiful flowers in the front yard, that makes you happy. This is a positive externality because the flowers gives an external benefit. When many noisy sports cars and motorcycles drive through your neighborhood, that can be really annoying and frustrating. This is a negative externality because an external cost incurs. People who are not involved in the consumption or transaction benefit or suffer from that.

When something brings an external benefit to the society, in the perspective of the whole society, people tend to under-consume it because they may choose the level of consumption only by looking at their self-interest and neglect the external benefit. Your neighbor is not growing enough flowers. Similarly, when something brings an external cost to the society, in the perspective of the whole society, people tend to over-consume because they may choose the level of consumption only by looking at their self-interest and neglect the external cost. Those people are driving noisy sports car and motorcycles too much (if they should ever).

How about on the Individual Level?

But we should take the concept of under-consumption and over-consumption to another level. When it is clear that McDonald's is high in saturated fat, sodium, sugar, etc, of course you know you should not eat a lot of it. (Exactly how much is a lot is another question.) When it is clear that exercise is good for you, of course you should exercise. These things have a strong impact on your physical health and less directly, your mental health, and thus your overall well-being.

Willpower, Lord!

Mainstream economic theories tell us that people know what they want (often they don't), and they execute it. This is part of the basis of why many economists think or assume that people are rational. And this is basically like a huge rejection of psychology, or just common sense. Some psychologists and neuroscientists analogically argue that there are two (or more) selves in our mind. One self wants instant gratification, and one self wants long-term gratification.

Your instant gratification self wants to eat that cheeseburger, but your delayed gratification self tries to beat the other side and reminds you, "Hold on! You want to fit into those jeans again!" Your delayed gratification self wants to go for a run, but you instant gratification self just wants to stay on the couch. You are always fighting with yourself! Sometimes, your instant gratification self wins, and you are further away from your long-term goal. In other words, you often cannot help but consume too much of certain things, like cheeseburger or high-calorie foods, and consume too little of certain things, like exercise or fruits. These are not exceptions. They are systematic errors. (McGonigal, 2012)

If we take it to a higher level, looking at the society, we see that there are under-demands and over-demands. Individuals together demand too much McDonald's, and so the society as a whole demands too much of it, and McDonald's responds with more supply. This can be illustrated as below:

And individuals together may demand too little apples or broccoli:

Do We Know What We Want?

The above describes what it is like when we know what we want but can't do it. What if we just do not know what is good for us?

A husband tells his wife to go hiking together. His wife tells him to go by himself and that she wants to stay home and chill. The husband insists and tells her that she will like it. She gives up and thinks, "if I do this just one time, he won't bother me again anymore". So they go, and as it turns out, the breeze feels really good and the air is really fresh. She loves it. From then on, they go hiking together every once a while.

Some researchers (e.g. economists, psychologists, etc.) argue that we often do not know what is good for us or what makes us happier. In social science jargon, there is a difference between experienced utility and expected utility. As it turns out, we are not very good at predicting what makes us better off. We may think lying on the couch, watching Netflix gives us more joy, but hiking with our friends or spouse may actually do that. We may think we should sacrifice for higher income and more material goods by doing a job that gives us very low autonomy, but the fact could be that we would be happier with a job that gives us higher autonomy, less income and thus fewer material goods. We fail to realize how easily we adapt to certain things, like clothes, electronic gadgets, etc., and how much social connections make us happy. (Frey, 2008; Layard, 2005)

One often leads to the other one, because of opportunity cost. When you over-consume bacon or spam, you under-consume vegetables or fruits. When you over-consume Netflix (alone), you under-consume hiking with someone. The opportunity cost of watching Netflix s is the time you could spend somewhere else. You could use the time to socialize and that could be the best out of all alternatives. Some amount of watching Netflix or being alone is probably good for you, but once it exceeds that amount of time, that becomes over-consumption.

Some (especially economists) may say, "who are we to judge whether people are consuming the right amount of things? How can we possibly know better than the person themselves? If people choose to eat a lot of bacon, smoke a lot, that simply reveals their preference, like bacon over broccoli, smoking over not smoking, or even present over future."

The problem with that thinking is, it ignores the biology of humans. We naturally have impulse, weak self-control and lack future planning. "Don't think about what is going to happen in a year when you have to run away from the lions, look for berries and hunt rabbits every day", said evolution. And if there is meat to eat, why think twice about it? Why control your desire? Again, said evolution. But the mechanism that was once good for our ancestors is not good for us now. It leads to a future (tomorrow, next month, ten years later, etc.) that we do not like or regret.

And because we are a social animal, we naturally desire at least some social connections. If you become socially reclusive ("hikikomori"), I know that is not good for you and you are under-consuming social life. As humans we have a lot of common basic needs. You cannot just say "everyone is different" and deny that fact.

If you still insist that "even if someone chooses to eat nothing but a lot of bacon for three meals every day, which will predict they will have serious illnesses and die soon, it is simply their preference of present over future", there is nothing I can say in this article because that would be another topic.

Conclusion

We often fail to choose the right amount of consumption, in the perspective of increasing well-being/utility. We do not live in the world of economic theories where we naturally know how much and what to consume, and are capable of executing the decision. The main source of under-/over-consumption is the lack of willpower and ignorance.


- McGonigal, K. (2012). The Willpower Instinct: How Self-Control Works, Why It Matters, and What You Can Do to Get More of It. New York, New York: Avery.

- Frey, B.S. (2008). Happiness: A Revolution in Economics. The MIT Press. p.127

- Layard, R. (2005). Happiness: Lessons from a New Science. London, England: Penguin Group.

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