The Analysis of Consumer Culture and Efficient Market Hypothesis

The Analysis of Consumer Culture and

Efficient Market Hypothesis

The consumer culture refers to the total sum of consumer concepts, consuming lifestyles and consuming behaviors in a certain period arose in the 1920s and 1930s in the United States. After that, the consumer culture was spreading in the western countries at a fast speed, and now it is an important part of the moral system in the western countries. The most obvious characteristics of consumer culture are that people pursue enjoyment and material comforts. Consumer culture is a profound economic and social culture in which capitalist countries transfer from production configuration societies to consumer societies. It is also a system in which the social values, cultural norms and customary ways of doing things could be passed from one generation to another generation. As the mainstream values in the western countries, contemporary consumer culture has exerted a great impact on people’s life. Despite advantages brought by consumer culture such as bringing happiness and enjoyment for people, consumer culture has lots of negative effects. And the negative impacts weigh over than the positive effects. In this article, the negative effects of consumer culture would be discussed from four aspects: psychological problems, people’s consuming behaviors, the crisis of confidence and resource wastes. As the flux of consumer culture greatly has impacted on the economy system, many people worry about the operations of the market, which leads to the other concept of the article — Efficient Market Hypothesis that assumes that the market is rational. However, there are already lots of criticism on the theory. Like human beings, the market could be irrational and contain lots of uncertain factors. The fatal deficiencies of Efficient Market Hypothesis could be analyzed from four aspects: information, markets, investments as well as the linear paradigm. And with the development of the economy, there are various kinds of products appearing in the markets including tangible products and intangible products. Especially with the development of digital technology, the intangible products such as in-app products have become more and more popular. However, the popularity of intangible digital products can get involve with a series of ethical and sociopolitical complications which could be discussed from three aspects: copyrights, regulatory privacy issues.

Despite some advantages of consumer culture, the disadvantages of consumer culture much weigh than the benefits. To begin with, the excessive flow of consumer culture leads to many psychological problems such as anxiety, depression, and low self-esteem (Ruskin and Schor, 2013 pp490). The flux of the concept of consumer culture influences people’s attitudes and perceptions towards material things. Under the influence of consumer culture, people take the enjoyment of chasing the material things as paramount pursue. Lots of advertisings everywhere with the purpose of increasing the demand for one product urges people to go shopping. The excessive flow of commercialism may lead to the comparing phenomenon. People, especially the teenagers feel that if someone around them owns some product they don’t have, they may also want to have those products. Otherwise, they may worry that they may be laughed at by others, which leads to anxiety and depressions. Besides, as the consumer culture flows excessively, those people who have more fortune to buy products are adored while those who have less fortune may have low self-esteem. What’s more, since the advertisements of products are pervaded in our life, some people have gained obsessive compulsive disorders for shopping. That is, some people feel uncomfortable if they don’t go for shopping. According to the research by Wu(2012), nearly 2 million women in China got the compulsive disorders for shopping. Especially with the rise of online shopping, more and more people could not control their behaviors of shopping and every day they spent a large amount of time in buying things. The appropriate behaviors of shopping do not bring any harm to people, but the excessive and uncontrollable behaviors are defined as morbid consumption, which is classified as one of the psychological problems medically (D'Orlando and Sanfilippo 2010). Hence, from the above descriptions, it could be seen that the excessive flow of consumer culture could lead to a series anxiety, depression, and low self-esteem among people.

In addition, the overflow of consumer culture is associated with the crisis of confidence. The development of contemporary consumer culture has facilitated the spreading of individualism. Just as Bauman said, the activities of consumption are individual because the acts of shopping satisfy the desire of people which are individual and hard to communicate. Consumers may gather together during the process of consumption, but the experience of consumptions are individual. The process of gathering together just helps to improve the pleasure of consumptions. Under the guidance of individualism, the individual desire is swelling. The individual-centered consumption is rejected and destroys the trust of others, for the excessive individual-centered consumers are only interested in material things, and they became less caring others. The consumer culture overemphasizes the pleasure culture and opportunism,which leads to the loss of trust between people. With the rise of consumer culture, the unstrained acts of consumption with all kinds of consumption risks appeared. In this way, people start to have a crisis of confidence in others. That is, people do not trust others anymore because they are worried that they get cheated easily. Besides, with the gap between the rich the poor becoming increasingly larger, the show-off consumptions among the rich have become more and more popular under the influence of consumer culture, which may lead to the dissatisfaction of the poor. For example, many rich people show off their luxurious bags such as LV bags on the social media platforms such as Instagram and facebook. Hence, the phenomenon of hostility to the rich appears. Many people with less income would attack the rich by words because they hate rich people. In this way, both of the rich and the poor feel insecure, which leads to appearance the crisis of confidence in the society.

What’s more, the popularity of consumer culture brings about the phenomenon of impulsive buying behaviors. As it is mentioned above, the popularity of consumer culture leads to the psychological problems such as obsessive compulsive disorders. Consumer culture has a great impact on the consuming behaviors of people, and impulsive buying is under the strong influence of consumer culture. Impulsive buying refers to the behaviors of unplanned buying. The advertisements have played an important in attracting and urging people in shopping. The impulsive buying behaviors may do good the economy because the acts of buying and selling could stimulate consumptions, but it may bring lots of troubles for those who are not so rich. For example, some women develop the impulsive buying behaviors, even though they have not so much money. When they buy one expensive product under the influence of impulsive buying behaviors, they may spend the whole month of living expense for the whole family, which makes the whole family get in trapped with the problems of the financial crisis. From above, it could be seen that the impulsive buying behaviors bring about the harm to those with less income.

Finally, the popularity of consumer culture causes the waste of resources. There is no deny that the rise of consumer culture expands the domestic demands and stimulate consumptions, which solves the paradox between overproduction and underconsumption. In this way, the prosperity of economy and society could be kept for a time,which delays the breaking out of the financial crisis. However, the consumer culture could cause the consumption alienation which refers to the consuming behaviors, psychologies and identities have been alienated. For example, the purpose of consumption has changed, and people just go shopping for the purpose of shopping instead of buying things they need. In this way, the consuming problems such as overconsumption, premature consumption, one-off consumption appear (Mackay 1997). For example, people buy many excessive things that they don’t actually need. In this way, the global amount of consumption resources has increased, and there are lots of unnecessary wastes. When there are more and more wastes, the resource crisis and environmental problems occur.

The rise and popularity of consumer culture in a sense impacts the operation of the market. For example, the acts of buying and selling facilitate the development of markets. How the market operates has aroused people’s attention. The Efficient Market Hypothesis assumes that the market is rational and operates efficiently. However, the market is not omnipotent. The hypothesis has mainly four fatal deficiencies.

To begin with, the disorder of market information makes Efficient Market Hypothesis less correct. The model Efficient Market Hypothesis has blur classification for the meanings of information. In order to meet the demands of empirical tests, the Efficient Market Hypothesis has introduced many concepts such as rational investment and Competitive Equilibrium; the definitions of the concept efficiency is wider, which leads to the less accurate measurements on the concepts ‘efficiency’. Nowadays, in the market, there is various information including false formation and fraud information, which makes the market less efficient. For example, some people release the false information of the stock exchange, which may influence the decision makings of investors. Therefore, the stock market could also be impacted. The market information is influenced by many uncertain factors. Therefore, it could be said that market does not run one hundred percent efficiently, which proves that the Efficient Hypothesis has the fatal disadvantage.

Besides, the fluidity of market makes the perfect and frictionless market non-exist. The model Efficient Market Hypothesis assumes that the market is static, but in real life, all markets are fluid. And it should be noticed that the fluidity is not equal to trading volumes. When there are low fluidity and large trading volumes, the stock market crash occurs. Therefore, investors think that the market should be equipped with fluidity. However, the model Efficient Market Hypothesis propose that no matter how the market flows, the pricing is equipped with fairness, and the Hypothesis does not explain how the stock market crash breaks out. In reality, the pricing is not equipped with fairness because the pricing is controlled by many uncertain factors. A comparably stable market needs fluidity so that the pricing could be comparably fair. Therefore, it could be seen that there is a paradox in the theories of Efficient Market Hypothesis, which is the other fatal deficiency of Efficient Market Hypothesis.

What’s more, Efficient Market Hypothesis assumes that all investors are rational ( Benoit 2004), which is not practical. Human beings are not rational all the time, including investors. In the real life, investors have different preferences towards investments, and the complete rationality is difficult to achieve. Investors have different predictions and expectation towards the trends of markets. Many investors are influenced by uncertain information, including false information and fraud information. It is quite easy for investors to make the wrong decisions. There are differences in the abilities of investors to collect, to analyze information, and some investors are poor in analyzing and judging the wrong information in the markets. Therefore, not all investors are rational, and the assumptions by the Efficient Market Hypothesis is wrong.

Furthermore, Efficient Market Hypothesis adopts the linear paradigm to predict the market, which could lead to the wrong predictions of some information. Efficient Market Analysis adopts the linear paradigm in analyzing market information and investments. That is, the linear paradigm makes the complex information more simple. However, the economic system including the financial markets is not linear and is complex, and it is hard just simply to define.

As a student of economics, based on the theories of consumer culture and market rationality, I want to talk about the issue of how intangible digital products get involve with ethical and sociopolitical complications from three aspects: regulatory issues, privacy, copyrights.

The flow of intangible digital products brings about the issue of regulatory problems. With the development of digital technology, the online transactions have become more and more popular, which makes the intangible products mushroom. However, how to regulate the unfair transactions have become a problem. For example, how the consumers safeguard their rights when they encounter the unfair treatments such as receiving the products which are broken. It is advisable that every nation strengthen the legislations in regulating the transactions of intangible digital products.

In addition, the intangible digital products could lead to the leakage of privacy information of users. For example, when some people use the In-app products, they have to fill lots of personal information online, which may lead to spreading of personal information. In this way, personal information sometimes could be sometimes unsafe, and many people feel insecure because some corporates may sell the information of customers for the interests. Therefore, users should be careful in using apps to fill personal information in digital products and the legislation to protect the privacy of users to be strengthened.

What’s more, the intangible digital products are associated with the issue of infringement of copyrights. As more and more people use intangible digital products, the interests, and market of those products become tempting for many corporates. But some corporates do not have the technology to develop those products, so those corporates imitate making products without getting the approval from others, which violates the copyrights of the intangible digital products. It is advisable that as it is mentioned above, there should be more legislations about the issues of copyrights.

In short, the excessive consumer culture could cause lots of problems, including psychological problems such as anxiety and depression, the crisis of confidence, the impulsive buying problems and resource wastes. The flow of consumer culture makes people care about the efficiency of markets. The Efficient Market Hypothesis that assumes that the market is rational is proposed, but there are factors proving that the hypothesis has lots of disadvantages including the incorrect information, fluidity of markets. Besides, the intangible digital products also arouse the attention from people such as the infringements on copyrights and privacy. To solve these above problems still has a long way to go.