Let’s start with three questions and three answers. First, does the United States have a problem with declining quality of life, a shrinking and more insecure middle class, rising poverty, and an escalating failure to provide for people’s most fundamental needs? Yes. Second, does the United States have a problem with “consumerism” as defined, for starters, by an excessive orientation toward spending, as well as consumption-related problems with the environment and global equity? Yes. Is this “consumerism” the cause of rising bankruptcies in the United States? No.

The bankruptcy question is the simplest. Warren and Tyagi define their question as “why are families going broke?” and aim to counter the view that rising U.S. bankruptcies are caused by profligate and irresponsible spending. Warren’s earlier work, with colleagues at the University of Texas, provides convincing data on the events that do lead to bankruptcies—mainly unforeseen events such as unemployment, illness, and divorce. The story of how what Warren and Tyagi call “over-consumption” (it’s not a word either Robert Frank or I use) got linked to the bankruptcy debate is a political one, which I will return to later. But for the record, neither my book, which has a grand total of one sentence on bankruptcies, nor Robert Frank’s, which devotes a scant page to it, is an explanation of why people go bankrupt. They are not even treatises on debt.

The thrust of Warren and Tyagi’s explanation for rising debt and bankruptcy is the influence of larger trends in economic and social well-being among families, especially those families at the middle of the income distribution. This is a well-known story, about which economists, sociologists, and journalists have written extensively since the 1980s. (Curiously, Warren and Tyagi ignore this literature.) Accounts have focused on the worsening distributions of income and wealth, stagnant wage rates and low growth in earnings for the majority of workers, the decline in the size of the middle class, and the increased precariousness of middle-class status. There is now extensive evidence that the economic gains of recent decades have gone almost exclusively to the top 20 percentof the income distribution, and disproportionately to the top five and one percent. These gains have not diffused throughout the population. Furthermore, these trends have been part of a broader deterioration in “quality of life,” measured by indicators of the quality and provision of public goods, the quantity of leisure, the availability of security, and so forth. My book The Overworked American was a part of this literature—showing that these economic changes had led to rising hours of work and a loss of leisure time. In The Overspent American, I noted that there has been a “quality of life” squeeze despite rising consumption, and that true social well-being began to diverge sharply from national income in the mid-1970s. The surge in inequality over the last 25 years has prompted important research showing the deleterious effects of inequality on a range of “quality of life” outcomes. A superficial reading would pit these trends against analyses of “over-consumption” and critiques of consumerism. But the two stories are consistent, and intimately related, partly through economics and partly through culture.

Prices trends are one part of the story. When the prices of goods are falling, households can increase the quantity of stuff they buy, even if they spend less overall. This has been a major phenomenon that the economic literature has mainly failed to notice, because it, like Warren and Tyagi, concentrates on dollar expenditures such as the Consumer Expenditure Survey. I have been gathering data on the actual quantities of products that Americans are consuming, from apparel and toys to computers and household furnishings. The quantity of products purchased has been rising sharply in many categories. Consider apparel, a commodity that Warren and Tyagi discuss. The number of new apparel items purchased on a per capita basis has increased dramatically. In 1991 the average American bought 33.7 pieces of apparel; in 2002 that number was 48. Rising acquisition has been followed by rising waste, a trend some in the industry have called “disposable clothing.” Many discarded clothes end up in the weekly trash bin—in 2001 the EPA estimated that the average household discarded 30 kg (66 pounds) of textile waste. Alternatively, they become part of the soaring export market of used American clothing being sold in poor countries. At least clothing has a resale market. In the case of other commodities, such as consumer electronics, discarded products are junked. It is estimated that in 2005, the United States will discard 63 million computers. The high concentration of toxic materials in some discarded products is finally getting some recognition, although the continued use of children in poor countries to recover these dangerous metals is shameful.

So part of the story is that American homes are filling up with stuff because stuff has gotten so cheap. The government’s index of department store prices, a broad measure of consumer prices, fell from 542.9 in February 1993 to 494.3 in February 2005. Durable goods prices at department stores have fallen even more, from 457.6 to 381.0.

There are two major reasons why prices are falling. The first is dirt-cheap imports. The American-led restructuring of the global economy has created new sources for the exploitation of labor and natural resources, as well as the economic, political, and military power to ensure that this exploitation continues. In apparel, low costs are produced in large part by sweatshop labor and by disregard for the environmental effects of production materials such as the pesticides used for cotton and toxic dyes. The market power of dominant firms such as Wal-Mart has been crucial in keeping costs down.

The second reason for falling prices is a longer-term trend, first noted by William Baumol in the 1960s and insightfully revisited by Jeff Madrick in reference to the contemporary period. Productivity growth in manufacturing, and its attendant cost reductions, has dramatically outstripped productivity growth in services. So stuff becomes cheaper relative to services, which have become relatively expensive. This is a big part of why households are buying lots of products, even as their basic needs for insurance, education, or child care are not met. Their dependence on these services is also why households with children are particularly hard-pressed. It may be worth noting here that while Warren and Tyagi often write as if households with children were the dominant demographic group, they in fact represent only 32 percent of U.S. households. Dual-earner families with children, the subject of Warren and Tyagi’s book, are a mere 13.7 percent of all households.

The other key part of the story of middle-class America’s declining quality of life is the dramatic worsening of the distributions of income and wealth. While Warren and Tyagi have concentrated on the median household, the spending action has been at the top. The best-off 20 percent of families have gained steadily since 1973, and now garner 47.6 percent of total income and 84.4 percent of total wealth. They also do the lion’s share of consuming. For example, in 2003 the Consumer Expenditure’s top income category (roughly equivalent to the top 20 percent) accounted for 46 percent of total consumption. They are also responsible for a highly disproportionate fraction of discretionary, luxury, or status-related consumption. For the record, I explicitly addressed my book to this group, calling them “affluent,” and in order to invite the broadest possible audience, “middle and upper middle” consumers. I argued that this top 20 percent has also become culturally influential, as their lifestyles and consumption patterns have become a target of emulation throughout the population. This led to the widening of the “aspirational gap” between what people lower down the income scale want and what they can afford. Desires have escalated while incomes have stagnated.

Here the distinctions between Warren and Tyagi and me are sharper. Their consumer is a highly rational, utilitarian agent, motivated by function and by absolute (rather than relative) notions of need. Engineers and plain-spoken Midwesterners come to mind—the types of people who won’t pay needlessly for name brands or status, who research their choices fully before buying. This is the vision of the consumer on which neoclassical economics is based. I believe it is also deeply at odds with a wide range of research on motivations and actual spending (such as impulse buying), as well as with the extensive understanding of consumers developed by marketers and advertisers. It is the view that my book aimed to overturn, by analyzing cross-sectional—not “anecdotal”—data regarding the social influences on consumption. What I found is that spending adjusts to individuals’ social situations. If you associate with and compare yourself to people of higher financial status, you will spend more and save less, in order to “keep up.” The reverse is also true. In recent years a growing body of economic research has supported the view that spending is a deeply social phenomenon. How people understand their needs, what they want materially, and how they feel about what they have are profoundly relative. If they weren’t, it would be hard to understand how Chinese and Indians, who are so poor in absolute terms, manage to save a quarter or more of their incomes while Americans, arguably the richest large population in the world, save virtually none.

Vehicles provide an example of the difference in perspective. Warren and Tyagi argue that purchases have been driven by safety. How then to explain soccer moms’ rush to unstable and demonstrably dangerous SUVs? And, if I may be permitted an anecdote from my neighborhood, what accounts for those very same mothers discharging their precious cargo every morning from perilous front seats? To understand Americans’ vehicle consumption, issues of status competition, identity, and power will take us much further than a utilitarian focus on safety. SUVsbecame the rage, and people jumped on the bandwagon.

This brings me to issues of consumer culture and materialism. For me, the most distressing aspect of Warren and Tyagi’s paper is their abrupt dismissal of the “moral” question of “whether families are . . . consuming too much of the world’s resources.” While it may not concern them, I believe it is the paramount consumption issue of our time. With less than four percent of the world’s population, Americans account for roughly a quarter of resource use, greenhouse gas production, and other environmentally degrading activities. Scientists have recognized for some time that most of the world’s ecosystems are in precipitous decline. The United States bears more responsibility for this decline than any society on earth, and to make matters worse, U.S. corporations are aggressively promoting our lifestyle around the globe. Understanding and communicating the seductiveness and powerful grip of consumerism was largely what motivated me to write my book. If Warren and Tyagi think I’m obsessed with granite countertops, they’re right. But it is not because they have anything to do with bankruptcy—it is because the mountainsides of my husband’s home state of Tamilnad, India, are being blown up to export those slabs to Americans who don’t have the faintest idea where they’re coming from. Even worse, they don’t even think to ask. Nor will they think about where they’re going when they get torn out, 20 years from now, to be replaced by the next great fad in kitchen surfacing.

This brings us to the political discourse of spending. The fact that credit-card companies and their lackeys in Congress pushed the line of personal irresponsibility to get their bankruptcy bill through is hardly surprising. This has been a consistent Republican strategy. It’s how they won on welfare; it’s what they’re doing on tort reform; and it’s the essence of their response to childhood obesity and commercialism. Why are children fat? The right-wing talking point is that it’s bad parents who let them sit around all day on their duffs eating potato chips and soda pop. But we can’t question the actions of Coca-Cola or McDonald’s—that would violate corporate “free speech” and consumer freedom. This crowd can pervert almost any research finding for their purposes. That said, I’m doubtful that my book had much impact on the bankruptcy debate. I fielded very few media calls about it, and I field a large volume of calls. Warren and Tyagi say I am “often cited” as “documenting irresponsibility” but fail to produce even one example of such an occurrence. I hear from conservatives about my other books, but rarely this one. I would like to think that this is because the book was read as I wrote it—as an analysis of a flawed social system, rather than as a critique of individual morality.

Where Warren and Tyagi and I may find common ground is on our assessment of how well the current system is working for Americans, whether they are “median,” wealthy, or poor. As our society becomes increasingly corporate-dominated, whether by the rapacious credit-card companies that are at the center of the Warren–Tyagi story or by the corporate-owned politicians whose taxation and spending policies have fleeced ordinary people at the behest of the wealthy, consumerism has become an even stronger state religion. As public goods decay and democracy wanes, the populace is offered SUVs, malls, and debt to keep them locked in. The pressure to consume undermines the things that give durable well-being. And the undermining of well-being intensifies the pressure to consume. It’s a bad deal, and it’s getting worse. Accounts like Warren and Tyagi’s, which fail to appreciate the symbolic and social power of the consumption system and the way in which “need” and “want” have been perverted in our culture, take us only so far.