Diderot effect & Personal finance management

The Diderot effect is a social phenomenon related to consumer goods. The effect comprises two ideas.

• - The first idea posits that goods purchased by consumers will be cohesive to their sense of identity, and as a result, will be complementary to one another.
• - The second idea states that the introduction of a new possession that is deviant from the consumer's current complementary goods can result in a process of spiraling consumption.

Denis Diderot (1713–1784) is a French philosopher. In a writing, he tells how the gift of a beautiful scarlet dressing gown leads to unexpected results, eventually plunging him into debt.

Initially pleased with the gift, Diderot came to rue his new garment. Compared to his elegant new dressing gown, the rest of his possessions began to seem tawdry and he became dissatisfied that they did not live up to the elegance and style of his new possession. He replaced his old straw chair, for example, with an armchair covered in Moroccan leather; his old desk was replaced with an expensive new writing table; his formerly beloved prints were replaced with more costly prints, and so on. "I was absolute master of my old dressing gown", Diderot writes, "but I have become a slave to my new one … Beware of the contamination of sudden wealth. The poor man may take his ease without thinking of appearances, but the rich man is always under a strain".

The term has become common in discussions of sustainable consumption and green consumerism, in regard to the process whereby a purchase or gift creates dissatisfaction with existing possessions and environment, provoking a potentially spiraling pattern of consumption with negative environmental, psychological and social impacts.

On avoiding bankcruptcy due to "Diderot effect", finance advisors give some recommendation, including:

• - See less adverstisements
• - Buy things that match our current living standard
• - Set firm budgets
• - Buy one new, give one old
• - Sometimes, challenge ourselves with one month of no purchase
• - Put less physical things on expectation