The Self-Destruction Hypothesis of Consumerism: The Inflation of Consumption Standards and the Mismatch with Household Income

Zy Liu and Di Yuan
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Zy Liu: Universal Life Church

No ztws6_v2, SocArXiv from Center for Open Science

Abstract: This paper proposes and develops a theoretical proposition concerning the endogenous evolution of consumerism: consumerism may not necessarily come to an end because of “excessive consumption”; rather, by continuously raising the consumption standards associated with “normal life,” it may make an increasing number of ordinary workers unable to participate in the consumption patterns it has itself constructed, thereby eroding the demand base on which it depends. Consumer demand has a positive expansionary effect during the early stages of economic development. The paper then explains why social consumption standards may continue to rise through three channels: firm competition; positional goods and social comparison; and the diffusion and amplification of cultural products and social media. On this basis, it argues that under conditions of market competition, firms simultaneously need to expand effective demand on the consumer side and have an inherent incentive to control labor costs, creating a structural mismatch between the growth of workers’ incomes and the rise of consumption standards. When consumption standards grow persistently faster than the actual disposable incomes of ordinary workers, consumption behavior may shift from “keeping up with the standard” toward “reducing, postponing, or even exiting consumption,” with particularly concentrated effects in marriage and family formation. Using the decline in China’s marriage and birth rates, the rising consumption standards associated with wedding photography and housing, and the adjustment of the real-estate sector as illustrative empirical cases, the paper distinguishes two post-turning-point adjustment paths—“structural consumption downgrading” and “aggregate-demand-driven consumption contraction”—and discusses the possibilities and limits of external trade as a substitute for domestic demand. The paper further constructs a conceptual income–consumption-standard mismatch model to characterize the pressure generated by the divergence between income and consumption standards and its transmission to consumption behavior, family formation, and future demand. Finally, it proposes four policy directions: optimizing social-media algorithms, establishing a Departmental Employment Quality Index (DEQI) for higher education, reducing the minimum cost of basic living, and limited government intervention in consumption externalities.

Date: 2026-10-02
New Economics Papers: this item is included in nep-cna
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:ztws6_v2

DOI: 10.31235/osf.io/ztws6_v2

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