Roy Shapira discusses the problem of wasteful consumerism and society’s throwaway culture, arguing that while the “right to repair” movement is important, antitrust policy is unable to address the underlying social and psychological drivers that push consumers to constantly purchase new items and can even hinder bottom-up pressures to reduce waste. Shapira analyzes various policy proposals and legal avenues to help change companies’ and consumers’ incentives in order to reduce environmentally harmful product obsolescence.
We live in a throwaway society. The average American uses their smartphone just two years before purchasing a new one and wears a new clothing item five times before dumping it. Such runaway consumerism is costly for consumers themselves, as they frantically spend on new products and constantly feel regret and unfulfillment because the things they possess are never enough. Even more troublingly, runaway consumerism destroys our environment. In the United States alone, consumers dispose of 150 million smartphones annually. Producing a single such smartphone requires extracting 75 pounds of ore from the earth, and dumping it creates highly toxic waste. The stakes of understanding what drives the current levels of consumerist waste and how to reduce them could therefore not be higher.
Legal scholars and policymakers have responded by fighting for consumers’ right to repair. The idea is that today’s throwaway consumerism is very much a product of sellers’ concerted effort to sell products with shorter lifespans and limit consumers’ ability to extend lifespans by erecting barriers to repair. These tactics to stifle repairs can include designing products with glued-in batteries and incompatible screws to weaponizing the law by claiming service manuals as trade secrets or using copyright to lock down the software needed to diagnose and fix problems. Increasing the availability of repair will help consumers save money and lessen the massive environmental burden, or so the argument goes. Over the past decade, a global right-to-repair movement has been gaining ground, and it now enjoys broad political support and regularly wins legislative battles in the U.S. and the European Union.
But while fighting for a right to repair is laudable and politically palatable, it is unlikely to achieve the end goal, namely, reversing the trend of mounting consumerist waste. This is because consumerist waste is a multifaceted problem. It emanates not just from functional product obsolescence, which repair can solve, but also from psychological (or “perceived”) product obsolescence, which repair cannot solve. That is, consumers often throw away old smartphones not because they stopped functioning and repair is too costly, but simply because consumers want to own the new model that just came out. In fact, evidence suggests that consumers proactively endanger their old iPhones when a new model comes out, hoping for a fortuitous “accidental” damage to justify (for themselves) spending on the new version. The question is therefore not whether consumers have a right to repair, but rather whether consumers want to repair.
To properly calibrate policy measures to reduce consumerist waste, legal scholars and policymakers need to develop a better understanding of what consumers want. What drives consumers’ purchasing and disposing decisions? The availability of repair is but one factor, often not the most important one. Consumer behavior is also heavily influenced by socio-cultural considerations, which are in turn a function of advertising, fashion trends, and peer pressure. Consumers decide what to purchase based not just on the price and features of the product, but also on what others around them buy, and how what they buy affects what others think of them. To illustrate, one study of dating sites reveals that owners of outdated smartphones are 56% less likely to go on a date, and that women on these sites are 92% more likely to judge a potential match for using an older phone. Sad, but true. Giving consumers a legal right to repair old smartphones may not matter much as long as consumers have such strong socio-cultural reasons to purchase new ones instead.
In a new essay titled “Consumerist Waste: Looking Beyond Repair” (forthcoming in the Michigan Law Review), I highlight the various drivers of wasteful consumerism, with special emphasis on the status and signaling concerns that nudge consumers to purchase new items even when the products they own function perfectly. I stress that not all status-driven “positional consumption” has to be wasteful from a societal perspective. Conventional wisdom treats all positional consumption as a rat race after status, with deadweight costs. But some types of positional consumption actually net valuable goods. After all, in the not-so-distant past, luxury brands separated from the pack by advertising their durability. In the words of one famous slogan: “You never actually own a Patek Phillipe. You merely look after it for the next generations.”Conspicuous consumption of durable goods is not necessarily a societal problem. The problem starts when consumers compete for status by consuming disposable goods. A key question is therefore why consumers recently shifted from signaling via durability to signaling via repeat purchases.
I then analyze the desirability of policy proposals to reduce consumerist waste. Existing proposals focus on more familiar tools, such as requiring disclosure on products’ estimated lifespans at the purchasing point and assuring repair at the post-purchase point. These tools may be necessary, but they are hardly sufficient. They do not attack all causes of product obsolescence and put too much onus on individual consumers. Take, for example, durability disclosure: The experience in the EU suggests that simply providing consumers with information on the expected lifespan of products does not move the needle. To affect real change in consumer behavior, policymakers need to employ specific design techniques such as “reversing the default” (instead of flagging products that are durable, flag products that are obsolete), and to frame the issue of durability not in terms of benefits to others (“ethical consumption”), and not even in terms of benefits to consumers, but rather in terms of avoiding future losses. The problem is that such thicker versions of durability labeling are likely to face serious political and legal hurdles in the U.S., such as first amendment challenges.
Another possibility to reduce consumerist waste is to leverage sellers’ reputational concerns in ways that would incentivize them to emphasize durability over newness. One conduit to affect sellers’ reputation is ESG ratings. Despite recent backlash, trillions of dollars are being invested according to various ESG criteria, which include companies’ environmental impact (hence the “E”). Yet, one would be wrong to think that these mounting ESG pressures push companies to reduce unnecessary product obsolescence, thereby lowering their adverse impact on the environment. Companies react to ESG pressures by releasing ambitious sustainability plans and touting their investments in recycling programs. Yet, per Aaron Perzanowski, they manage to avoid confronting “the core tension between environmental responsibility and business models built around the ever-escalating production, sale, and replacement” of billions of products every year. In other words, companies can receive reputational credit points for being green without reducing their role in product obsolescence. Apple or fast-fashion giant H&M, for example, are two culprits of consumerist waste, yet they still seek and receive great ESG ratings and accolades.
Ideally, we would want ESG ratings and funds to coalesce around factoring in product obsolescence as follows: screen out firms whose business model relies on constantly churning out new items with disastrous environmental impact; do not just grant credit for recycling, but also take away credit for planned obsolescence; ask companies to disclose their political lobbying on proposed right-to-repair reforms; and so on. However, there is ample reason to doubt that this transformation will happen on its own, as ESG rating firms and fund managers are not necessarily incentivized to ensure that ESG ratings reflect actual environmental performance.
Another conduit for affecting sellers’ reputational concerns is the discovery process in litigation, which can be utilized to extract information and increase the public saliency of wasteful practices. The public resents planned obsolescence, yet evidence on whether and how companies promote it is notoriously hard to come by. On paper, litigation can help in digging out such information in public for everyone to see, thereby facilitating reputational discipline. In reality, there is a dearth of litigation and a dearth of public information on these issues, mainly because of a wave of mandatory arbitration and gag clause provisions that took over consumer contracts with the help of the Supreme Court. Elsewhere, Luigi Zingales and I proposed several measures to get around the secrecy problem in the context of toxic pollution, and I believe that similar measures should apply in the context of wasteful consumerism too.
Put differently, the law as currently construed serves to lock in the wasteful status quo. When courts enforce gag clauses and mandatory arbitration provisions, they effectively limit the potential of reputational pressures to affect change in sellers’ behavior. Similar dynamics may be in play with regulators. Consider, for example, the interactions between antitrust and consumerist waste. On the one hand, antitrust enforcement can and should become part of the solution for consumerist waste, such as by enforcing the ban on “tying” practices that limit repair. On the other hand, policymakers must make sure that antitrust is not stymieing a shift in norms in the business community against obsolescence. In the fashion industry, for example, some designers and retailers have reacted to public backlash over their wasteful practices by discussing steps to change the length of fashion seasons and limit sale periods (until the 1990s, the fashion industry used to have seasons; now, global retailers introduce new lines of clothes on a weekly basis). Yet such attempts to reduce waste has put these fashion companies under investigation by antitrust enforcers in the U.S. and the EU for violating rules that ban competitors from collaborating to reduce production. Going forward, enforcers should rethink the desirability of applying antitrust law to stifle collaborations that are meant to reduce systemic externalities.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
