CHAIN EFFECT OF

CONSUMERISM IN OUR
AMERICAN ECONOMY

MARIE WEST
MICROECONOMICS ECON161

Chain Effect of Consumerism in our American Economy | Marie West

Although Americans enjoy buying goods and spending money, it seems the economy has
been adversely affected by the production, advertising, and purchasing of goods. Creative
minds have come up with gadgets galore to make any task easier. Brilliant minds come up
with colorful designs to draw us in. And then we have unlimited financial resources with
which to march ourselves into debt purchasing all of these conveniences and luxuries.
America has led itself to consumerism through assembly lines overproducing goods,
overwhelming advertising, and the abundant use of debt.
Assembly lines increased the availability of goods in America
The assembly line idea was thought up by Ransom E Olds, creator of the first ever
vehicle company, known as Olds Motor Vehicle Company. Inspiration came from the disassembly lines in Chicago slaughterhouses (Made in Chicago, n.d.). Olds patented the first
gasoline-powered vehicle in 1897, but he didnt stop there. In 1901 Olds was building the
Curved Dash Oldsmobile, the first commercially successful car mass-produced on an
assembly line in the first factory to employ an assembly line process in a manufacturing
environment (Ransom E. Olds, n.d.). America welcomes the first assembly line produced
consumer good.
When Henry Ford started his Ford Motor Company, he took the assembly line to a
whole new level. Ford started the first moving assembly line. Fords company started
building cars on a manual assembly line.
In case youre wondering how Ford workers could assemble 26,000 cars a month before the introduction of
the assembly line, this is how they did it: The frames were set on sawhorses in a line down the middle of the
plant. Parts runners delivered parts to each chassis. Assembly teams moved down the line of chassis performing
just one assembly operation. For example, when the time came to attach wheels, the parts runners set down
four wheels in the work area. When the assemblers installing wheels on the next chassis up the line finished
there, they moved down the line one station and installed the wheels on that chassis. Just as they finished that
one, the parts runners dropped off the wheels beside the next chassis down the line, and the assemblers moved
on to do that one. At each car, as the assemblers for a step finished and moved on, the runners dropped the
parts- say fenders- just as those assemblers arrived from up the line. (How'd They Do It Before Moving
Assembly Line?, n.d.)

Although the assembly line was able to produce a vehicle every twelve hours, Ford wanted
more, he wanted faster, he wanted everyone to have a Model T, and that meant increasing
the productivity of the assembly line. This was the inspiration for the moving assembly line,
collaborated on and created by Fords team, with a mechanized belt moving at a speed of six
feet per minute, moving from work station to work station as workers pierced together the
area of their specialty (wheels, seats, etc), until the beginning chassis ended as a full vehicle

Chain Effect of Consumerism in our American Economy

Page 1 of 8

Chain Effect of Consumerism in our American Economy | Marie West

in drivable condition. Ford introduced the availability of a vehicle for every home, bringing
introduction of consumerism to Americans. (Dec 01: This Day in History, n.d.) (Evolution
of Mass Production, n.d.)
Once the moving assembly line was in full force, and business owners witnessed the
increased production, others were ready to bring the mass production idea into their
organization. This went hand in hand with Americans desire to have more household
appliances in their homes; washing machines, radios, and refrigerators. Frigidaire produced
the first in-home self-contained refrigerator in 1922 (Refrigerator Age, n.d.), and every home
wanted one. In the 1920s, over 1 million Maytag in-home electric wringer washing machines
were sold. (Evolution of the Maytag Wringer Washer, n.d.) The RADA was the first home
radio receiver, allowing Americans to listen to the radio from the comfort of their own home.
And listen they did, immediately making requests of musical selections they preferred to be
played. (The First Radio Designed for the Home, n.d.) Assembly lines produced everything
they could, allowing Americans to live their dream of having anything they wanted.
Today, we still have assembly lines producing the majority of consumer goods.
Thankfully, technology has greatly improved modern assembly lines, increasing efficiency
and productivity, while decreasing manpower and manufacturing errors. (What is a
Production Line?, n.d.) In todays facilities, top executives work to ensure the quality of their
goods increase while the cost to produce decreases. Technology has allowed machines to
handle more tasks which used to require a human, decreasing the salary costs of laborers,
and the margin of human error. Plus, machines can work at a faster speed, and without
needing breaks. All of this combined enables factories to run constantly, if they wish, 24
hours each day and 7 days every week, while decreasing the amount of lost product from
mistakes or errors. With other modern technologies, such as mobile phones and the internet,
organizations are able to communicate on a significantly larger scale, allowing individuals
from all over the world to connect in real time, to collaborate, and make decisions. Modern
technology has raised the bar, from an internet meeting of executives deciding on the next
global production move down to the automatic arms of a machine speedily and flawlessly
building pieces in an ongoing production assembly line. (The Modern Assembly Line: 100
Years Later , n.d.) At this point, Americans can purchase whatever they want, whenever they
want, wherever they want, and at almost whatever price they want, thanks to the mass
production that modern technology has allowed.
An ever-progressing art, assembly line production, from the dis-assembly line in Chicago,
to the electric moving assembly lines, to the mass producing modern assembly lines of today,
assembly lines have produced more in a faster manner more effectively, providing a thriving
basis for consumerism in America.

Chain Effect of Consumerism in our American Economy

Page 2 of 8

Chain Effect of Consumerism in our American Economy | Marie West

Advertising informed Americans of the mass amount of goods available to them.

The first radio commercial aired on August 28, 1920 for a Jackson Heights apartment
complex. Radio advertising grew quickly, and everyone wanted to be heard. Today, radio
has many different forms, from the traditional radio station within a home or a vehicle, to
internet radio through an app on a mobile phone, to streaming live radio on a computer or
tablet. During an average week, 95% of people still listen the radio in some form. (Berman,
March 17, 2008) As of 2013, 29% of people have listened online in the last week. (The State
of the News Media 2013, 2013) Based on these numbers, radio advertising is still highly
successful, and plenty of money is spent researching the most effective time slots to reach
listeners. Heres one approach:
If you are feeling generous, you can reasonably assume that 40% of the households in your market have
the radio on at the peak time of the day. If your market has 100,000 households, you can assume that
40,000 households have the radio on during peak listening time. Lets use that number and divide it into
the number of radio stations within your market. If you have 20 stations in your market, the average
radio station has 2,000 households listening at any given time. Some stations will have more, and some
will have fewer listeners. The top station in town may have as many as 5,000 households listening during
peak time. This would be a huge share of the market and it is likely they have fewer. Other stations may
be as few as 500 listeners in a market of 100,000 households. (Newspaper Advertising vs Radio
Advertising, n.d.)

Twenty years later, the first television advertisement- also known as a television
commercial was broadcasted. The Bulova watch company paid $4.00 to place an ad
immediately before the Brooklyn Dodgers and Philadelphia Phillies baseball game on July 1,
1941. The image was of a clock showing a second hand moving around the timepiece and
had the logo Bulova watch time. (Imagery for Profit, July 6, 1941) When Dr Pepper
launched its Im a pepper, youre a pepper commercial, the catchy jingle revolutionized
commercials themselves. The Dr Pepper commercial accentuated the joy of being part of a
community, based on being a pepper, and focused on the idea that anyone who had a Dr
Pepper was part of the cool crowd. Since everyone seeks joy and inclusion on their road to
happiness, this started Americans seeing how easily they could pursue happiness through
purchasing and owning a Dr Pepper. (1979 "I'm a Pepper" Commercial, n.d.) Other
companies quickly jumped on this idea, to get Americans to buy their products.
Welcome to advertising today! A person cant look anywhere without seeing something
being marketed in some way. Television shows are interrupted by commercials every few
minutes. Our mail is inundated with coupons, weekly ads, and fancy junk mail. Driving,
walking, and even riding public transportation overwhelms us with huge billboards, a sky
filled with marquees, and moving advertisements on vehicles and busses. Even the internet
Chain Effect of Consumerism in our American Economy

Page 3 of 8

Chain Effect of Consumerism in our American Economy | Marie West

is now filled with advertisements on the side of the website we visit, an interruption in our
information search for a commercial, and pop-ups every time we move around on a webpage.
We are constantly viewing advertising, services we can have performed, items we can
purchase, requests for this new area or that organization.
Well, its a non-stop blitz of advertising messages, President of the Marketing Firm Yankelovich, Jay
Walker-Smith said. Everywhere we turn were saturated with advertising messages trying to get our
attention. Walker-Smith says weve gone from being exposed to about 500 ads a day back in the 1970s
to as many as 5,000 a day today. It seems like the goal of most marketers and advertisers nowadays is
to cover every blank space with some kind of brand logo or a promotion or an advertisement, WalkerSmith said. (Cutting Through Advertising Clutter, n.d.)

We are so overwhelmed with advertising everywhere, we filter it out because we simply

cant absorb that much information. We cant process that much data. With that much
advertising, how could we not constantly be making purchases and spending all the money
and time we have in pursuing what we see, feel, taste, and hear all around us? We see, we
want, we buy. Its the America that has been created by mass production and mass
advertising.
Now that goods are available in mass quantities, and advertisements are everywhere
working to get us to make purchases, what do we purchase all of these goods with? Surely,
people cant buy all that stuff with only a paycheck. Of course not! Thats where debt comes
in. Buying things we dont need with money we dont have. So, lets take a look at credit,
and the influence credit has had on consumerism.
The use of credit has enabled Americans to significantly overspend and create a
perilous emotional connection to consuming.
Credit is the term that is widely used to represent a purchase made without the item or
service being immediately paid for. As far back as the 1800s, merchants and buyers would
exchange goods through the concept of credit. (The History of Credit Cards, n.d.) The early
1900s is when oil companies and department stores picked up on the idea, allowing the use
of credit only at their respective locations. Next came, the Diners Club card and American
Express. All of these credit accounts, however, werent revolving credit. They were known as
charge accounts. Their purpose was convenience and loyalty, allowing customer to
frequent a business, make purchases, and pay in full after a specified time frame. For example,
a store owner selling farming supplies and equipment might allow customers to make
purchase on account throughout the farming season, and pay for all of the purchase when
the crops are harvested. Just before 1960, the first revolving credit card was introduced by
MasterCard. This changed the way Americans used their credit cards. Instead of having to
Chain Effect of Consumerism in our American Economy

Page 4 of 8

Chain Effect of Consumerism in our American Economy | Marie West

pay in full at the end of each billing cycle, consumers could purchase more than they had the
money for, because they could extend the balance to pay over time.
Way back when, in the good ol days, people used cash or traded goods when they went
to the store to make a purchase of an item or good they were in need of, such as seeds for the
farm or a pair of work boots. Now-a-days, people use credit cards to make so many purchases,
and with this change, comes increased spending.
Experimental research also suggests that credit cards can stimulate overspending: People are often
willing to pay more for the same product when using credit than when using cash . . . It is less
psychologically painful to swipe a credit card than to physically hand over cash. Manoj Thomas and
colleagues recently found that spending differences . . . were smaller when people were required to use
credit to make purchases than when people were required to use cash. Credit helps to anesthetize the
pain of paying . . . (How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation
of Vices)

Then, we find there is a link between purchasing with a credit card and overspending.
In a series of experiments in the 1980s, Richard Feinberg manipulated whether or not credit card logos
were visible while participants contemplated how much they would be willing to pay (in cash) for
several products. (Credit Cards as Spending Facilitating Stimuli: A Conditioning Interpretation, n.d.)
Feinberg found that hypothetical willingness to pay and actual cash donations to charity were
significantly greater when credit card logos were visible than when they were not. (These surprising
findings were replicated two decades later by Priya Raghubir and Joydeep Srivastava. (Monopoly
Money: The Effect of Payment Coupling and Form on Spending Behavior, n.d.)) The results suggest
that consumers have been conditioned to associate credit card logos with consumption. Exposure to
credit card logos may therefore stimulate craving, much like smelling fresh cookies stimulates hunger.
(Why We Overspend with Credit Cards, n.d.)

These extensive research studies show how credit cards lead to overspending, and
overspending leads to debt, which becomes a nasty cycle with a complicated ending. Credit
card companies want consumers to spend more. When consumers spend more, credit card
companies make more money, because balances are extended to be paid over time instead
of paid off at the end of the billing cycle. When a balance is extended over time, credit card
companies make money from the interest earned on the revolving balance. This makes the
credit card company executives richer, while the consumer owes more and more money.
When the mental health of the consumer becomes more frustrated, they want to help

Chain Effect of Consumerism in our American Economy

Page 5 of 8

Chain Effect of Consumerism in our American Economy | Marie West

themselves feel better, and they do so by spending more money. This is a vicious cycle, one
that is hard to break.
When we take just a moment, we can think about this thought further. If individuals are
overspending and in debt with the above mentioned cycle, is it any surprise America has
such an overwhelming national debt? Below is a clip from an article comparing the national
debt to a household:
The FY 2011 federal budget is approximately $3.82 trillion . . . We have a family that is spending $38,200
per year. The familys income is $21,700 per year. The family adds $16,500 in credit card debt every year
in order to pay its bills. After a long and difficult debate among family members, keeping in mind that it
was not going to be possible to borrow $16,500 every year forever, the parents and children agreed that
a $380/year premium cable subscription could be terminated. So now the family will have to borrow
only $16,120 per year. (The Budget Defecit and Debt: Is the Government Like a Household?, n.d.)

Overspending by Americans is not only an individual issue, its a complication spreading

throughout all areas of our American lives.
In closing, America has led itself to consumerism through assembly lines overproducing
goods, overwhelming advertising, and the abundant use of debt. Assembly lines increased
the availability of goods. Advertising informed Americans of the mass amount of goods
available. The use of credit has enabled Americans to significantly overspend and create a
perilous emotional connection. We clearly have creative inventions and forward thinking in
our country. We are blessed with goods and services all around us, for every need and want
that we have. In order to maintain our financial health, we need to not only be aware of these
things, we need to be proactive at monitoring our purchasing habits, and be aware of the
consumerism in our lives.

Chain Effect of Consumerism in our American Economy

Page 6 of 8

Chain Effect of Consumerism in our American Economy | Marie West

Works Cited
1979 "I'm a Pepper" Commercial. (n.d.). Retrieved from Dr Pepper:
http://www.drpepper.com/about/timeline/#ed584d802e55c0b73f53fa7017b7f65d
Berman, B. (March 17, 2008). Keeping DJ Endorsements Alive. Media Week.
Credit Cards as Spending Facilitating Stimuli: A Conditioning Interpretation. (n.d.). Retrieved from
Jstore: http://www.jstor.org/stable/2489426?seq=1#page_scan_tab_contents
Cutting Through Advertising Clutter. (n.d.). Retrieved from CBS News:
http://www.cbsnews.com/news/cutting-through-advertising-clutter/
Dec 01: This Day in History. (n.d.). Retrieved from History.com: http://www.history.com/this-dayin-history/fords-assembly-line-starts-rolling
Evolution of Mass Production. (n.d.). Retrieved from Ford: Go Further:
http://www.ford.co.uk/experience-ford/Heritage/EvolutionOfMassProduction
Evolution of the Maytag Wringer Washer. (n.d.). Retrieved from Maytag Club:
http://www.maytagclub.com/page-16.htm
From the American System to Mass Production. (n.d.). Retrieved from Babson.edu:
http://faculty.babson.edu/krollag/org_site/org_theory/barley_articles/hounshell_mass.ht
ml
How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices. (n.d.).
Retrieved from Johnson Cornell University:
http://forum.johnson.cornell.edu/faculty/mthomas/VisceralRegulationofVices.pdf
How'd They Do It Before Moving Assembly Line? (n.d.). Retrieved from The History of American
Technology: http://web.bryant.edu/~ehu/h364/materials/cars/assmbl_1.htm
Imagery for Profit. (July 6, 1941). New York Times.
Made in Chicago. (n.d.). Retrieved from PBS:
http://www.pbs.org/wgbh/amex/chicago/sfeature/sf_made_05.html
Monopoly Money: The Effect of Payment Coupling and Form on Spending Behavior. (n.d.). Retrieved
from http://vorige.nrc.nl/: http://vorige.nrc.nl/redactie/next/geld/monopolymoney.pdf
Newspaper Advertising vs Radio Advertising. (n.d.). Retrieved from Publishers-Edge:
http://www.publishers-edge.com/index_files/Paper_vs_Radio.htm
Ransom E. Olds. (n.d.). Retrieved from R E Olds Foundation: 100 Years of Grantmaking:
http://www.reoldsfoundation.org/ransom-e-olds

Chain Effect of Consumerism in our American Economy

Page 7 of 8

Chain Effect of Consumerism in our American Economy | Marie West

Refrigerator Age. (n.d.). Retrieved from Diesel Punks:
http://www.dieselpunks.org/profiles/blogs/refrigerator-age
The Budget Defecit and Debt: Is the Government Like a Household? (n.d.). Retrieved from
Consumerism Commentary: http://www.consumerismcommentary.com/budget-deficitdebt-government-household/
The First Radio Designed for the Home. (n.d.). Retrieved from Spark: Museum of Electrical Invention:
http://www.sparkmuseum.org/collections/radio-enters-the-home-(1920-1927)/the-firstradio-designed-for-the-home/
The History of Credit Cards. (n.d.). Retrieved from Credit Cards:
http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php
The Modern Assembly Line: 100 Years Later . (n.d.). Retrieved from Infinity QS, Take Control: Quality
Check : http://www.infinityqs.com/blog/modern-assembly-line-100-years-later
The State of the News Media 2013. (2013). Retrieved from State of the Media:
http://www.stateofthemedia.org/2013/audio-digital-drives-listener-experience/audio-bythe-numbers/
What is a Production Line? (n.d.). Retrieved from Technology Student: A Design and Technology
Site: A to Z Technology: http://www.technologystudent.com/prddes1/prodline1.html
Why We Overspend with Credit Cards. (n.d.). Retrieved from Psychology Today:
https://www.psychologytoday.com/blog/retail-therapy/201306/why-we-overspendcredit

Chain Effect of Consumerism in our American Economy

Page 8 of 8