Conversation With Matt Drucker

Mitchell: Pleasure to be with you Matt. I’ve known you for a while, having first met you back in 2014 at the Academy of Management conference when we were both junior academics. We’ve collaborated on presentations at other conferences in the US and Australia since then. Our paths have crossed a number of times given our shared interest in human cognition and behavior as they apply to risk and personal choice.  But this is about you. What prompted you to write this book? 

Drucker: Thanks, nice to be doing this. I think the book is a culmination of working as a therapist for several decades with people who, among other things, have been traumatized by financial stress. So much of 21st century life is wrapped up in our relationship with money. Some handle it well; others don’t. The ones who find handling money hard do so for a range of reasons associated with personal cognitions and behavior. So the book is pointing out that the way people think about money and the way people respond to environmental influences greatly influences how they handle their wallets so to speak. 

Mitchell: In the book, you suggest that people are overspending more than ever before. The optics are there and it certainly ‘feels’ that way to a lot of people. On what did you base this conclusion? 

Drucker: There are two ways to answer that question. Running our experimental groups in the money lab certainly produced evidence that people were having unusually high compulsions towards spending money, especially during the pandemic lock down period between 2020 and 2021. Self-reporting by our participants suggested that they were spending more than they normally would, mainly as a way to reduce the stress of the pandemic effects, including getting ill, having friends getting ill, and the stress of being sequestered at home. It appeared that some habits formed from that period tended to continue with the same people after the lock down.  From a macroeconomic perspective, the e-commerce and online shopping statistics show a clear and continued uptrend in online spending right up to today.     

Mitchell: You bring an interesting combination of qualifications and perspectives to the issue of consumer overconsumption that you write about in The Art and Science of Spending Less. First as a counsellor, then as a researcher and then as the head of the consumer spending lab and university research network in Australia and New Zealand. How did your experiences as a counsellor influence your views?

Drucker: What makes this phenomenon of consumer overspending so problematic to interpret is that global overconsumption and hence overspending is occurring at a time when job loss and income reduction is also on the rise. Despite the market signals that money is tight, that people just don’t have as much disposable income as they used to, personal spending is still increasing. Yes, there are now indicators that aggregate household consumption is flattening out, but this is a very recent development and as I say, it’s an aggregate count which means it doesn’t truly reflect what’s going on in certain segments. 

Mitchell: You refer to personal sovereignty a couple of times in the book. Some might associate this term with a conservative philosophy, but having known you and your work for years, I don’t regard you as conservative. Can you please explain this a little?     

Drucker: Sure. And by the way I agree with you. The term is associated with conservative discourse and certain thinkers, some of whom are quite extreme in their views, suggesting that exercising one’s own sovereignty is akin to a rebellious act of confrontation. One needn’t read that into it. The point I am making is that people don’t exercise their agency. All of us have human agency but few of us use it as well as we should. We don’t need to express our agency in a confrontational manner; we need to be asking a lot of questions so we can make better decisions about the choices we make with our wallets. Why is this product three times the price it was two months ago?  What additional features can I have with this electronic device that won’t cost me anything?  Why shouldn’t I disagree with someone else’s ideas about how you should dress or worse, think?  It’s as much about exercising agency as it is paying attention to one’s environment and recognizing nuanced influences that are in play for you. Of course, the impact of digital marketing and the internet is one of the greatest sources of pressure on people to buy things they don’t need.

Mitchell: Are you optimistic that this trend, if you call it that, will reverse? 

Drucker: I think mass consumer overconsumption will go on for a time yet. Where and when the inflection point occurs, I don’t know. At some point I do believe there will be an upheaval of sorts. How that plays out, I don’t know.