Book Review: Geoffrey Miller's 'Spent'

by: Miguel Barbosa

I. Summary: Spent- Sex, Evolution & Consumer Behavior
Humans spend a significant amount of time signaling their genetic fitness. Genetic fitness is a combination of: physique, intellectual quotient, and the big five personality traits (i.e openness to experience, conscientiousness, extraversion, agreeableness, neuroticism). These genetic indicators have evolved over millions of years; they are reliable and consistent across cultures. Unfortunately, consumerism enables marketers to influence humans into displaying “genetic indicators” by purchasing goods and services. These “purchased indicators” are often unreliable and cost humans more than traditional signaling (i.e. socializing).
Miller argues that genetic fitness is difficult to fake for extensive periods of time. In other words, goods that are marketed for consumers to appear more outgoing, intelligent, young, and wealthy -are transient. For example, one could easily determine a woman’s age by looking at her hands or a man’s neuroticism by going on several dates with him.

II. So What?
Miller concludes that by spending less time purchasing unnecessary goods, humans would have more time to enjoy life and find suitable mates and friends. In other words, humans are equipped with the most precious fitness indicators- health & intelligence. So the question is how to live happily showing off our personal traits, while avoiding unnecessary consumption.

III. What should be done about this unnecessary consumption?
“It is very inefficient to buy new, branded, mass produced products from stores at full manufacturer’s suggested retail price (inefficient here suggesting a suboptimal path towards displaying attractive genetic qualities/traits) because nothing about the purchase says anything about one's traits besides our purchasing power.”
First, we must remember that, the sense of ownership is a “cognitive illusion…founded on the denial of habituation, consumer fashion cycles, technical progress, and our own mortality.”
Second, rather than making laws we should focus on changing; “informal social norms research in game theory and experimental economics has shown that informal social norms can powerfully influence human behavior and sustain human cooperation.”
Third, we should shift from income taxes toward consumption taxes - this shift would encourage less consuming, more earning, saving, investing, and charitable giving. (Thus promoting longer term retirement security, family wealth, social welfare, technical progress, and economic growth.)

IV. How do the lessons in this book apply to Value Investors? There are two primary areas where these ideas can be applied.
1. Personal Finance - One should avoid paying premiums for goods. This will result in saving more money and having more time to find suitable mates and live a happier life. (In essence you're saving money and not lowering the quality of your genetic signaling.)
One should also question every purchase decision and remember that there’s a market behind every product and service.
2. Investing in businesses (if fairly priced or undervalued and…). Invest in businesses that have very large moats around their products. Invest in businesses that can consistently influence people to pay premiums for goods/services. Invest in businesses that can do all of the above plus significantly play on genetic signaling.

Simple Partial Example:
Buffett has always said he is a poor spender. Having his needs met, he has focused on being rational, saving, and investing. By doing so Buffett has leveraged one of his most important genetic indicators, a high intellectual quotient. More importantly he has done all of this without diminishing the quality of his life, friendships, or happiness.

V. My opinion & why you should read this book (4/5 stars)
If you read this book you’ll find that as an intelligent spender you are more likely to live a happy life, find suitable mates, and still have time for your most meaningful activities. Two of the chapters are slightly longer than necessary but Miller’s conclusions and policy implications are very important.

Lecture Slides Are Included Below (these slides are copyrighted; please email me for permission before re posting the slides)

Miguel Barbosa, Simolone Sense Reviews Geoffery Millers Spent Part 2