Consumption and the Consumer Society

6.3 Consumption and Public Policy 
It is unrealistic to expect that a majority of people in rich countries will become adherents of 
voluntary simplicity. If we accept that overconsumption is problematic, for reasons of ecological 
impacts, social cohesion, or personal well-being, then we must consider whether government 
regulations are needed to curb consumerism. 
Of course, some people will argue that government intrusion into personal consumption decisions 
is unwarranted. But current government regulations already influence consumer decisions—for 
instance, high taxes on products such as tobacco and alcohol discourage their consumption to some 
extent. On the other hand, subsidies are often used to increase the demand for certain products. 
Taxes and subsidies can be justified for several reasons, including as a response to externalities or 
to achieve some social goal. Buyers of new electric vehicles in the United States are eligible to 
receive a $7,500 federal tax credit, a subsidy that reduces the environmental externalities of 
transportation and encourages a shift away from fossil fuels. 
Rather than dictating consumer behaviors, thoughtful regulations can encourage people to make 
choices that better align with social and personal well-being. The book Nudge proposes that we 
can use the approach of “libertarian paternalism” to have a dramatic influence on people’s 
behavior.
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Often this relates to changing the default option for a particular choice, such as whether 
one is enrolled in an organ donation or retirement savings program. People are still entirely free to 
opt out of such programs, but making enrollment the default choice can significantly increase 
participation rates. We now consider a range of different policy ideas for responding to concerns 
about overconsumption. 
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Material for Box 8.3 from Short, 2012. 
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Thaler and Sunstein, 2008. 

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CONSUMPTION AND THE CONSUMER SOCIETY
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