Wednesday, November 14, 2007

Fantastically Poor Reporting

This article reviews the results of a recent study linking materialism and self-esteem. It's terrible. Not the study, but the reporting about it. I'm guessing that this kind of poor reporting will occur all over the place as the study gets some traction in the media.

The first problem:
"Researchers have found that low self-esteem and materialism are not just a correlation, but also a causal relationship where low self esteem increases materialism, and materialism can also create low self-esteem."

This fundamentally fails to appreciate the definitions of correlation and causality (not to mention proper usage of those words). If self-esteem and materialism are significantly related to each other (say in a regression), then we can conclude they are correlated. Without proper identification, though, we can say nothing about which direction the causality runs. That is, we cannot be sure if self-esteem causes materialism or vice versa. An unidentified correlation presumes that causality runs both ways. They do not "find" that causation runs both ways, until we have identification we have to assume that it does.

The second problem:
"The paradox that findings such as these bring up, is that consumerism is good for the economy but bad for the individual. In the short run, it’s good for the economy when young people believe they need to buy an entirely new wardrobe every year, for example. But the hidden cost is much higher than the dollar amount. There are costs in happiness when people believe that their value is extrinsic. There are also environmental costs associated with widespread materialism."

This is just dumb. If you want to make statements regarding the economy, you should know something about how it works. And you should know something about how people work. "Consumerism is good for the economy" is an ignorant statement. A brief increase in consumer spending may boost GDP for a short period before prices rise. However, increasing consumer spending means that less money is saved, and this means that growth is lower in the long run due to less investment. If materialism raises consumption permanently, we'll have lower long run income per capita. "But the hidden cost is much higher than the dollar amount". The dollar amount of what? The dollar amount of increased spending? I thought this was a good thing, not a cost. What the author means is that there are hidden costs that offset his (false) benefits of higher consumer spending.

And what are these hidden costs? The loss of happiness from extrinsic self-esteem is one. I don't mean to be cynical, but the whole point of materialism is to boost my self-esteem extrinsically when my intrinsic self-esteem is low. So it doesn't necessarily mean that I'm less happy. From the outside, perhaps I think this not a good trade-off, but the conclusion does not follow automatically.

The second hidden cost is the ephemeral "environmental costs". This would only be true if the goods preferred by materialistic people were relatively "dirty" compared to the goods purchased by less materialistic people. As less materialistic people, by definition, spend less, they should be saving more. This higher savings would be loaned out so that others could buy investment goods (houses and factories). I'm not convinced that Gap jeans are necessarily worse for the environment than another McMansion going up. At a minimum, one would have to support this statement with some kind of evidence.

All in all, a stunningly bad piece of reporting. Cheers.

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