By Brett Coffman, Ph.D., CFP®, ACFBA, EA
Mr. Diderot worked hard to create a name for himself. He was a well-known writer and philosopher. He translated and wrote encyclopedia’s, several novels, plays, and thousands of articles. The encyclopedia’s he wrote were some of the most widely distributed of his time. Despite being his life’s work, writing did not pay well, and he lived in financial poverty. The significance of his work was mostly recognized posthumously.
Even before cellular phones, however, word about the impending marriage and his need to come up with a dowry traveled fast and far. Catherine, The Great, Empress of Russia, heard about the dilemma and offered to buy Mr. Diderot’s library for an amount that today would be equal to about $50,000. It was no small sum.
With great relief, Mr. Diderot was able to pay the dowry for his daughter’s wedding and still have funds left over for his own use. His first splurge was for a luxurious scarlet robe, which he treasured. However, he quickly noticed how drab it made his other common possessions appear. As a result, there was a sudden urge to purchase new items to match the grandeur of the robe. Funds were dispersed for a new rug from Damascus, new sculptures were purchased, and then a new table followed, then a new mirror, and a new Moroccan leather chair, among other items. Eventually, his spending resulted in debt, and he became very dissatisfied with his possessions.
Mr. Diderot shared his experience in an essay titled, “Regrets on Parting with My Old Dressing Gown” and what he experienced later became coined as the Diderot Effect. He wrote about becoming a slave to new possessions and the challenges of sudden wealth. Purchases are cohesive with your identity and purchasing a product that is deviant from that identity can trigger spiraling consumption, leading to the purchase of more and more things. Purchases can become reactive and rarely contribute to fulfillment or happiness.
At some point, most of us have witnessed and experienced the Diderot Effect in our lives. For example, we may feel that the purchase of a new dress necessitates the purchase of new corresponding jewelry and shoes. The purchase of a new car may necessitate the purchase of accessories that you were perfectly content to not have on the previous car. After all, we are marketed to like no humans in the history of mankind.
The Diderot Effect continues in full force today. The best antidote is making purchase decisions in the context of a well thought out plan that encompasses short and long-term goals. Oh, and it does not hurt to reduce exposure to advertising and only make purchases that complement what you already have. As Matshona Dhliwayo said, “Be happy when you work, thankful when you earn, cautious when you spend, shrewd when you save, and charitable when you give.”