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Behavioral Economics and Minimalism: It’s All About Making Better Choices

In our contemporary capitalist society, we are constantly bombarded with advertisements and merchandising from a variety of sources. Most companies around the world rely on this to reach consumers. In this context, modern approaches in marketing are data-driven, based on specific individual behaviors rather than guesswork or assumptions. While this is good to target audiences and offer them only what they likely want, it may lead persons to compulsive buying. One solution to avoid this problem is understanding the principles of behavioral economics—a field of economics and psychology that studies decision-making processes of individuals. In this article, I will present a practical way of leveraging behavioral economics.

Put simply, behavioral economics tries to explore the reasons behind people’s buying choices and why they make irrational decisions sometimes, as described by Investopedia. Whilst marketing tries to make consumers buy more products, economics wants them to make better decisions, in accordance with behavioral scientist Julia Kolodko. And many times, the best option is to not buy. As Julius Rock, the character played by Terry Crews in Everybody Hates Chris TV show says: “If I don't get it at all. I’ll save more”. So, to protect ourselves from the dangers of intrusive marketing, we must have strong awareness about what’s important for us. In line with this, the ascending minimalist lifestyle is hugely helpful to achieve that. Here’s how.

The word minimalism is well known for the art movement that emerged in the 1960’s. It also refers to a trend in design and architecture. In both cases, it emphasizes the use of fewer materials and the focus only on necessary elements. More recently, minimalism has evolved to a whole new way of living. In this regard, author James Clear best defines minimalism as focusing on and committing to the fundamentals, instead of details. It’s a tool to learn how to have a more fulfilling life with less, according to Joshua Fields Millburn and Ryan Nicodemus, stars from Netflix documentary Less is Now, directed by Matt D'Avella—another famous minimalist who has more than 3 million subscribers on his YouTube channel.

A key element of the minimalist lifestyle is decluttering. But it’s not about throwing everything away, living with almost nothing, or wearing only one color. It means you have to let go of anything that doesn’t bring value to your life and save space for what truly matters. This can be applied to multiple areas of our lives, from relationships to household items to personal finance. In our social network, including friends and family, we should try to surround ourselves with people who support us and make us feel good in their presence. Keep the circle small and part ways with toxic individuals. As for our homes, the focus needs to be on essential items, which varies from person to person. If something lacks purpose or passion, it doesn’t deserve a place in your life, as written by Kimberly Zapata in an article for Oprah Daily.

The other major benefit of minimalism is perhaps where the connection with behavioral economics is made more visible: money. As previously introduced, we live with an increasing pressure to spend more. Thankfully, behavioral economics have provided us with powerful insights in terms of understanding how we make decisions. Without going into more technical details, for instance, we are now able to identify the effects of phenomena like the hedonic adaptation, the aspiration treadmill, the endowment effect, and the Diderot effect. Everyone is subjected to get in trouble with their finances if they don’t recognize these principles. And once again, minimalism can help with that.

Minimalism sets you up to make an honest evaluation of exactly what you need, therefore you stay away from compulsive buying and compulsive hoarding. It’s easier to endure the instinct of consumerism when you have a sense of satisfaction with your life and your belongings. It’s easier to separate what you need to succeed from superfluous desires when you live a goal-oriented life. The minimalist lifestyle encompasses all of that and is also useful to make you careful with comparisons. So, as Joshua Millburn and Ryan Nicodemus say, minimalism allows you to make more deliberate decisions, and incorporating it in your life can guide you to find happiness, fulfillment, and freedom.

As explained, minimalism is way more than just getting rid of possessions or owning fewer things. It has more to do with knowing what really matters and sticking with that. In other words, you must be mindful of what you really need, so you don’t end up wasting valuable resources with meaningless stuff. It’s about finding happiness with less. Once you have mastered this idea, you will be ready to make better decisions around the things you buy and consume, the main goal of behavioral economics. By looking through the lens of minimalism, we can focus on what’s important, free ourselves from consumerist habits and save time, energy, and money as a result.

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