Janus Thinking

A study to be published next month by scientists at the Netherlands’ Erasmus University will argue that being happy can help you live a longer life.  It concludes that, while being happy does not cure ills, it does correlate to people not getting sick in the first place.  It can also add years to your life because happy people are more likely to look after themselves, both physically and mentally.

So should happiness take its place as the consummate luxury pursuit?  And, if so, how can it be pursued?

Happiness as a concept is being studied from more and more perspectives.  Developments in neuroscience are allowing scientists to measure and map our behavioural reactions to an increasing number of stimuli.  Is the ultimate luxury product then the one that registers the best emotional response to you personally or perhaps the highest average positive emotional response amongst a given group?

Lord Richard Layard of the London School of Economics has also developed an economic model which is often referred to as “happiness economics”.  He argues that current tax regimes and public policy do not address (or attempt to disincentivise) the negative impacts of competiive consumption rom our lives (i.e. the consumption which does not make us any happier, or makes us even sadder).  Nor does it account for the fact that our tastes evolve over time so that we might need extra money to achieve the same level of happiness as someone with different tastes.

Various studies have also determined that our level of happiness does not substantially increase after an individual’s purchasing power reaches around US$10,000.  Instead, cultivating closer ties to one’s family, friends, or to common interest groups can help, or being able to freely express oneself (in speech and through voting, for example) and to enjoy a reliable and predictable system of justice can make one feel happier. (And even more interestingly, these might differ according to how one pursues his life purpose, as an earlier Theta vs. Lambda post suggests.)

The jury is still out on whether happiness itself will become the metric du jour for what constitutes a luxurious life.  For now, its material proxies still seem to be hotly pursued.

The way in which consumers interpret companies’ marketing efforts affects how successful their marketing has been.

This might seem like an obvious point to make, but it is a particularly useful point to remember in the marketing of luxury products.

To understand better these different pathways to interpretation, I have developed a simple characterisation consisting of two personality types.

I call them Theta and Lambda. These two personality types differ based on what individuals perceive to be
their life goals or purposes.  These differences are central to how they then interpret the products they buy.

The typical Theta (Θ) personality seeks affiliation and control as an ultimate life purpose.  Because of this, they loom to fit in or contextualise themselves within a desired group and use socially-derived understandings of product characteristics as a basis for their consumption.

Lambdas (Λ), on the other hand, seek achievement and uniqueness as an ultimate end goal.  As a result, they are more likely to interpret products based on their individual responses to the product, how it helps/prevents them to stand out, and how the product benchmarks against their regular consumptive patterns.

What this means is that marketing strategies – and particularly those of luxury brand owners – can apply different positioning to similar products in order to fulfill people¹s different expectations for how the product is meant to help them represent themselves and reflect their life goals.

John Donne once said that no man is an island, but newly released findings from U.S.-based Coldwell Banker suggest that man still wants to buy himself a piece of one as the ultimate luxury home site.

More than 300 rich households in the U.S. were interviewed for the poll.  To be classified as such, they must own a home worth in excess of $1 million dollars and have an equal amount of liquid assets to invest.

27% responded that their dream home would be located on an island while another 22% preferred a more rustic setting and only 18% selected a suburban or foreign location.

Interesting that many of these choices seem to reflect a desire to escape — or at least get away — rather than become more connected.

Antwerp Facets newswire builds on the arguments I have outlined before in their post on on the advent of diamond derivatives.

Apparently Bankers are delighted that speculators will bear a stock-financing burden that has become too risky for them.

But I have other concerns too….

Introducing a futures market to enable speculation on something that has no material worth is a very dangerous game.

It is not just speculators who can lose out.

A spate of short selling on the futures market can have real world impact - not just on swanky jewellery firms and wealthy mining companies, but on the economies which rely on diamonds. Whereas Soros’s speculation against the pound merely hammered the UK economy, diamond speculators could impact fragile producer economies like Namibia.

Futures traders don’t care about the underlying value of assets; just in guessing right on market direction.

Any futures market based on a limited range is unlikely to be strong enough or liquid enough to avoid massive distortions.

We are living in dangerous times. The insurance companies must be rubbing their hands.

Read the rest of this entry »

This week I came across an excellent essay by James Twitchell from the Winter 2007 issue of the Wilson Quarterly, a publication by the Woodrow Wilson International Center for Scholars in Washington DC. Lux Populi describes the commodification of luxury in an interesting and throught-provoking way.

Twitchell says that as Americans have developed an increasingly strong desire to associate themselves with recognized objects of little intrinsic but high positional value, they’ve been increasingly able to afford some form of luxury–it’s the “Twinkiefication of deluxe.” Twitchell argues that as everyone aspires to luxury, “luxury” is no longer something that differentiates.

There is very little cake a rich person once gorged on that a ­middle-­class person can’t get on his plate. You name it; I can taste it. So I can’t afford a casita on Bermuda, but I can get in on a time-share for a weekend. No, I can’t own a stretch limo, but I can rent one by the hour. Maybe Venice is out this year, but I’ll go to the Venetian in Vegas instead. I can’t afford an Armani suit, but what about these eyeglasses with Giorgio’s name plastered on them? Commodore Vanderbilt said that if you have to ask how much a yacht costs, you can’t afford one, but check out my stateroom on my chartered Majestic Princess. True, I don’t have my own Gulfstream V jet, but I can upgrade to first class on Delta with the miles I “earn” by using my American Express card. Is that my own Lexus out front? Or is it on lease from a used car dealer? You’ll never ­know.

Twitchell goes on to say that the very wealthy only have two genuine luxury items left: time and philanthropy. Overall it’s an interesting argument, and it certainly fits in with many of the trends we’ve been tracking on Janus Thinking. You can read the whole article here.