By Manavi Yamani

Abstract:

This article explores the profound connections between existential anxiety, economic structures, and shifting perspectives on consumerism and well-being. It argues that the dominant neoclassical economic model, focused solely on material growth, fails to address the underlying existential anxieties that drive consumer behaviour. Drawing on insights from behavioural finance, economics, and psychology, the paper demonstrates how consumerism and materialism are both responses to and causes of existential distress. This consumerism, fueled by advertising and cultural norms, creates a vicious cycle of dissatisfaction and further anxiety. This article aligns with the emerging field of existential economics, advocating for a reorientation of our economic model away from consumption towards a life/ecology-centric approach.

With the pervasive threats of climate change, political instability, and macroeconomic crises, the sentiment of “Why even bother?” has become a defining refrain of modern life. When the future feels uncertain—or even non-existent—it becomes difficult to justify long-term financial planning. We tend to internalise doomsday narratives which distorts our ability to make good decisions. Existential dread might manifest in terms of procrastination or inertia towards saving and a broader tendency toward developing a status quo bias wherein we might avoid confronting uncomfortable realities and grow complacent towards long-term planning. 

Hyperbolic Discounting and Short-Term Bias

Commitment devices, such as retirement accounts and pensions, traditionally serve as mechanisms to enforce long-term financial planning by constraining access to funds until a future date. The existential anxiety of “Why bother saving for a future I may never see?” undercuts the very purpose of commitment devices. David Laibson’s (1997) observation that “the elimination of commitment devices would lower the level of capital accumulation” ties directly into this dilemma: without the psychological assurance or expectation of a stable future, the incentive to lock money away for retirement weakens. Existential dread leads individuals to engage in short-term buying and selling of stocks, driven by fears of uncertainty in the long run. This impulsive behaviour often results in missed opportunities for substantial gains from compound interest. The reason behind this short-termism can be understood through hyperbolic discounting, a behavioural economics concept that highlights our tendency to overvalue immediate rewards over future ones. As Laibson explains, this leads to inconsistent preferences and difficulty in constraining future choices. Individuals often prioritise short-term gratification, applying higher discount rates to near-term events than distant ones. This cycle of deferral, fueled by cognitive biases and external anxieties, results in a population unprepared for the future, financially insecure, and prone to greater economic distress. 

Financial Innovation and Mass Advertising

This short-termism in finance extends to broader patterns of consumer behaviour. The modern financial system, with its increasing liquidity and ease of credit, exacerbates this psychological tendency. As Laibson notes, “Financial innovation may have caused the ongoing decline in U.S. savings rates, since financial innovation increases liquidity, eliminating commitment opportunities”​. The widespread availability of credit cards, consumer loans, and other forms of quick access to cash provides no barriers to immediate consumption, encouraging behaviours that undermine long-term financial stability. This liquidity, while offering convenience, diminishes the effectiveness of traditional commitment devices—mechanisms that force individuals to save for the future, such as pension plans or retirement accounts. This aligns with William Irwin’s argument in The Free Market Existentialist, where he acknowledges the manipulative forces at work in modern capitalism. Companies exploit psychological vulnerabilities, pushing people to consume by feeding into their anxieties. 

In the late 19th century, the emergence of new institutions like mass advertising and consumer credit fueled the growth of a “consumer economy.” This was accompanied by the parallel rise of economic theories that positioned consumers as central to the economy. Paul Hamburg notes that the advertising and media “market desire” and perpetuate a market for frustration and disappointment, ensuring that consumers remain engaged in a continuous cycle of consumption. Meanwhile, influential economists like E.R.A. Seligman argued that consumer credit, with the liquidity it provides, was vital for stimulating economic growth, leading to a societal shift that favoured immediate gratification over long-term financial prudence. Manipulative marketing, as seen in Akerlof and Shiller’s work Phishing for Phools, exploits the anxieties of individuals, pushing them to purchase goods that they do not need, thereby feeding into a cycle of short-term gratification. Sartre, however, emphasises that “there is freedom only in a situation,” and individuals must take responsibility for resisting these manipulative forces​. 

Money and Meaning

According to Agata Gasiorowska et al. (2018), money functions as a psychological buffer against existential anxiety, especially the fear of death. Studies show that even the mere reminder of money helps people reduce death-related thoughts, underscoring how deeply money is tied to feelings of security and self-worth. This connection between money and existential comforts leads to consumerism- as a cultural response to the human condition of confronting mortality. However, this pursuit of wealth creates a paradox. While materialism and financial success may offer short-term relief from existential anxiety, the long-term effects are detrimental to well-being. Gasiorowska et al. highlight that overvaluing money and material possessions is linked to lower life satisfaction and negative social outcomes (p. 396)​ money serves as a cultural tool in modern Western societies, where consumerism is seen as a path to meaning and security. Materialistic values are deeply embedded in societal structures, offering comfort through the promise of control and stability. People internalise these values, associating financial success with existential security, and thus contributing to the persistence of materialistic behaviours despite their long-term negative consequences. Confidence in our place in the social world hinges on our ability to participate in consumerism. Teenagers and young adults line up for hours or refresh pages obsessively to secure the latest Nike or Yeezy drop, knowing that possession of these coveted items instantly elevates their social standing.

The Anxious Consumer

Victor Lebow (1955) famously observed that to sustain a highly productive economy, society must “convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption”. This insight highlights how deeply integrated materialism is into our identities and puts forth the argument that modern capitalism relies on constant consumption to maintain economic growth. This notion aligns with John Kenneth Galbraith’s critique in The Affluent Society, where he argued that consumers’ desires are not natural or intrinsic, but rather manufactured by economic systems to maintain constant consumption i.e. consumerism and materialism are responses to existential dread but also perpetuate the very distress they seek to alleviate. Galbraith’s argument that production “only fills a void that it has itself created” presents the argument that capitalism thrives by creating the very anxiety it then sells solutions to.

Léonard and Arnsperger (2009) note that, ‘Consumers spontaneously translate the basic existential anxiety into risk-taking heroism (high-risk activities or consumption of health-damaging but elating substances) as well as addictive search for cosmic significance. Consumerism, the systematic use of goods and substances to assuage the “hole within,” is one of the main contemporary results of this dynamic.’ This perspective highlights that consumerism is not merely a matter of preference but a complex response to deeper existential fears. This dynamic can also extend to financial markets, where investors, driven by similar existential fears, may resort to impulsive trading or speculative investments in a quest for immediate relief.

Globalisation and Neoliberal Policies

Globalisation and neoliberal economic policies have introduced labour market uncertainties, disproportionately affecting younger generations. The offshoring of jobs, precarious employment, and wage stagnation contribute to a sense of instability that fuels existential dread. The uncertainty about securing long-term employment, compounded by outdated social safety nets, forces many individuals to question whether financial planning for the future is even worth it. This mirrors the refrain of ‘Why bother?’ that permeates modern economic discourse. Globalisation has also introduced critical global risks, such as climate change, pandemics, and technological hazards, threatening the sustainability of life. Meanwhile, outdated social safety nets have failed to keep pace with the shifting needs of younger generations, leaving them exposed to financial uncertainty and hardship. This calls for a new economic paradigm that prioritises equity, sustainability, and human well-being, addressing both the growing risks and ensuring future resilience. 

The emergence of risks such as AI, pandemics, and climate change is a direct consequence of modernization and technological advancements. Contrary to the belief that these developments would solve core human anxieties, Ulrich Beck’s concept of risk society suggests that they often exacerbate them. Beck’s concept of a “risk society” is that are often global and unequally distributed, with younger people bearing much of the brunt.

Effects on Firms and Innovation 

Existential crises, driven by economic insecurity and uncertainty, not only impact personal finances but also significantly affect firms and innovation. A study by Stanford scholars Shai Bernstein and Timothy McQuade reveals that during economic downturns when employees face financial stress, innovation within firms suffers. This phenomenon was particularly evident during the 2008 housing crisis, where employees who experienced significant declines in home equity were more likely to abandon complex, exploratory projects in favour of safer, incremental advances, resulting in fewer breakthrough innovations. As Bernstein notes in his working paper, “Economic uncertainty harms innovation. When the economy tanks and workers begin to worry about their household wealth, corporate creativity suffers.” Evidence suggests that it’s not the objective state of the economy but rather our perceptions and feelings about it that increasingly drive such behaviour. Feelings matter. Emotional responses to economic conditions can affect consumer behaviour and decision-making in business innovation. For instance, during periods of heightened anxiety, people tend to choose safer, less innovative projects, which can stifle economic growth. 

Emile Durkheim, in his seminal work Le Suicide (1897), examined the social factors influencing suicide rates, proposing that rising suicide rates were linked to the spread of capitalism- which had created a state of anomie, a condition where traditional norms and values were eroded, leaving individuals disconnected and purposeless. This sense of ontological insecurity or existential angst has always existed. Millennials and Gen Z report experiencing higher levels of loneliness compared to earlier generations, with surveys indicating that 30% of Millennials often feel lonely. Gen Z has emerged as potentially the loneliest generation to date. Additionally, a study reveals that 34% of Millennials—who constitute the largest segment of the workforce—are contemplating job changes in the post-pandemic landscape, seeking greater fulfilment that transcends mere financial compensation. There’s increasing research suggesting that falling birth rates in certain regions could be tied to growing existential and environmental anxieties. The prospect of bringing new life into a world seemingly teetering on the brink of civilizational breakdown—with increasing climate disasters, resource scarcity, and socio-political instability—creates deep uncertainty. 

Eco-Anxiety and the Economic Dilemma

This goes beyond individual cultural responses- as it is coupled with the firms’ unrelenting innovation. Consumption growth becomes the foundation for stability in the economy. The current trajectory of global consumption, especially in high-consuming countries like the United States, is ecologically unsustainable. The demand for resources to maintain Western consumption patterns (such as high meat diets, extensive use of cars, and high energy consumption) significantly exceeds the Earth’s capacity to regenerate those resources and absorb the resulting waste. This ecological impact necessitates a rethink of the dominant economic paradigm. 

Society stands at a critical crossroads: rejecting economic growth risks plunging us into crisis, yet the relentless pursuit of it threatens the very ecosystems vital for our survival. This urgent dilemma largely remains unacknowledged in government policy. The escalating climate crisis, coupled with economic uncertainty, has ignited a wave of eco-anxiety. 

If eco-anxieties continue to rise, they could have significant economic consequences, leading to reduced labour output, lower innovation rates, and a shift in social behaviours such as consumption and procreation. Professor Emeritus Ralf Buckley’s observation that “eco-anxieties” may lead more people to adopt “lie-flat” lifestyles—marked by fewer children, and reduced financial ambition. If individuals become increasingly anxious about the future of the planet, they might not only avoid long-term investments but also reconsider their role in a consumption-driven economy. 

Existential Economics

Human beings are not merely material consumers; they are social and existential beings deeply oriented toward meaning-making. Our economic systems must reflect this broader understanding of human welfare. Existential economics acknowledges that personal economics are inherently existential, encapsulating the substantial psychological weight associated with our finances. People experience anxiety about money because it is intertwined with fundamental aspects of life. 

To create a more resilient and fulfilling economy, we must redefine success beyond material wealth and prioritize policies that address both economic and psychological well-being. A shift toward an economy focused on well-being, rather than survival, could mitigate these issues. The Neoclassical premise that the economy exists to fulfil material needs is increasingly out of step with the environmental crises facing humanity. There needs to be an argument made for repositioning economics away from this narrow, consumption-driven model towards a life/ecology-centric economy. Business practices, investment decisions, and consumer behaviours would be reoriented around their impact on life and the environment. Ultimately, economics is nothing more than a collection of agreements among people about how to manage the human material household; thus, we need to reorient it to reflect our nature as social beings. 

About the author:

Manavi Yamani is a final-year student at the Jindal School of Government and Public Policy, pursuing a B.A. (Hons) in Economics. Her research interests span Macroeconomics, Behavioral Economics, and Economic History.

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