Dodging the Diderot Effect
I used to have a Harley. Now I have a Vanguard account.
When I graduated college in 2013, I walked directly into a job making more money than I’d ever imagined. As far as starting salaries go, it was average, but after years stocking shelves and delivering pizzas, I felt like I’d won the lottery—one of those thousand dollar a week for life type deals.
To my credit, I immediately began contributing to a 401k, and I quickly paid off my student debt, but I still had money left over. I was living in New York City with disposable income, so I did what most 21 years olds would do—I started buying shit.
Fast forward a few years, and I had a bigger salary and bigger desires. I bought a sweet Harley Davidson, and I quickly learned that Harleys are only cool if you customize them. So I bought custom pipes and custom handlebars. I bought a custom seat and custom grips. Custom mirrors and a custom fairing.
Before I knew it, I’d spent half what the bike costs just to make it “cool.”
Then I realized motorcycles are more fun to ride when you take them to cool places. So I bought a new truck and motorcycle ramps and fancy straps to tie it down.
It didn’t take long to run up a thousand dollars a month in gotta have it type expenses. And you know how often I rode that motorcycle?
Once a week—if I was lucky.
Turns out I’m not the first person to experience this plague of abundance. Ancient Mongolians walked on the same hedonic treadmill as us.
Genghis Khan wrote the history of the ancient world by relentlessly conquering it. With each victory, his soldiers looted the losers and added to the coffers of the Mongolian Empire. Every caravan coming home was towering with treasures from foreign lands—furniture, garments, perfumes, jewelry, weapons—you name it, they had it.
You’d think the treasures created luxury for the Mongolians. These were people who had lived in tents for centuries, weathered harsh winters, and worked tirelessly for food.
But the loot wasn’t luxurious. It was burdensome.
To satisfy the people, the Mongolians needed more raw materials. To work the raw materials, they needed more craftsmen. To feed the craftsmen, they needed more food. To supply the food, they needed vast trade networks. And on, and on, and on.
As Jack Weatherford wrote in his book about Genghis Khan, “Novelties became necessities, and each caravan of cargo stimulated a craving for more. The more he conquered, the more he had to conquer.”
Yuval Noah Harari said something similar in Sapiens: “One of history’s few iron laws is that luxuries tend to become necessities and to spawn new obligations. Once people get used to a certain luxury, they take it for granted. Then they begin to count on it. Finally they reach a point where they can’t live without it.”
This law was true thousands of years ago, it’s true today, and it will be true long after we’re gone.
People love stuff.
When people get stuff, they need more stuff for their stuff.
It’s a vicious, never ending cycle. The lyrics are different but the melodies are the same.
Come to find out, this phenomenon is so pervasive, it has a name—The Diderot Effect. As James Clear explained:
The Diderot Effect states that obtaining a new possession often creates a spiral of consumption which leads you to acquire more new things. As a result, we end up buying things that our previous selves never needed to feel happy or fulfilled.
This is exactly what happened with me and my motorcycle!
Eventually I came to my senses. I sold my motorcycle. I sold my truck. I stopped buying things I didn’t need (although if you ask my wife, I probably still have some room for improvement).
Instead of collecting possessions that shackled me, I began collecting things that liberated me—stocks. You see, I’ve found that the Diderot Effect applies to stocks just like it applies to physical possessions. The more you buy, the more you want to buy. But the great thing about stocks is that when you buy more, you don’t need a bigger house to keep them in. They all fit nicely in one brokerage account.
And as your stock collection grows—rather than weighing you down—it lifts you like a buoy with the rising tide. Instead of locking you in to a large house, monthly minimums, and a high paying job to finance your possessions, it opens doors to opportunities you might not imagine.
For me, my stock collection provided the comfort to try a new career—a career that paid less than my first job out of college more than eight years ago. And when that new career didn’t work out, my stock collection bought me time to read, write, play golf, go for walks, and recharge before my next career pursuit. I can’t think of anything else you could collect that makes such positive use of the Diderot Effect.
Now don’t think I’m some virtuous monk with no possessions. I’m typing this article on a Macbook while standing at my Uplift desk. Behind me are hundreds of books sitting on Ikea shelves. In the closet next to me is an ever expanding collection of camping gear. And I can look out the window to see my car whose trunk is full of my golf clubs.
Don’t get me wrong, I still have possessions—plenty of them. But I’ve become much more deliberate in accumulating possessions because I know they multiply like unsupervised rabbits.
Now when I buy things, I do my best to make sure they’re as modest as possible, aligned with my core interests, and have a high entertainment to cost ratio.
The golf clubs in my car—they were a one time purchase. I actually bought them second hand from a friend. I’ve played dozens of rounds with them, and they’ll probably see hundreds more. Golf is a hobby I enjoy with my wife. It gets me outside. It connects me with other people. And it gives me a real world challenge to constantly work at.
The books on my shelves—they bring me wisdom and entertainment. They help me write these articles. They keep me on the couch or by the pool when I could be out spending money. They help me make better decisions. And their entertainment to cost ratio is higher than any other purchase I can think of. I spent 25 hours reading The Path to Power, and it cost about $30—good luck finding better entertainment at barely $1 per hour.
I’m not suggesting you sell all your possessions and head into the woods like Thoreau. I’m simply suggesting you question your purchases. Honestly ask yourself if your things are freeing you or weighing you down.
Before you slide your card again, remember me and my motorcycle. Remember the Mongolians and their spoils of war. Remember the last thing you bought—where is it now?
Will your next purchase move you closer to freedom and happiness or drudgery and dependence? Society is telling you one thing, but closer scrutiny may tell you another. It sure did for me.
Photo by Michael Benz on Unsplash
