It’s Cool to be Poor: The Minimalist Movement and its Effect on the Economy

Erin Smith, Period 1

Tom Shadyac, an American movie producer with a resume including the production of several Hollywood blockbusters such as Liar Liar and Bruce Almighty, used to live in a home with 17 bedrooms and 13 bathrooms, totaling in at around 17,000 square feet.[1] Now, he lives in a 1,000 square foot house, and no, he did not lose all of his money. This Hollywood dream- liver made the conscious decision to scale back his material assets in favor of the pursuit of happiness. In defiance of the consumeristic American dream, there is a growing trend in the United States that leans toward the concept of downsizing, especially into tiny homes. And as major of a change this is in a person’s personal life, those same changes translate into economics. What, then, are the economic effects of the growing tiny house culture in the United States, and do these extreme methods really draw closer to true happiness?

A simple term that begs to be defined is “tiny house.” A tiny house, according to Tiny House Community, is “a home of 400 square feet or less, either on wheels or a foundation.”[2] Rather than tiny, a home between 400 and 1,000 square feet is considered small, but these homes still share many characteristics of a tiny home. These homes have limited storage space and usually consist of a kitchen, bathroom, dining/living area, and a bedroom loft. Tiny homes can be bought directly from manufacturers or built buy the owners themselves, and most plans can be personalized to fit the needs of the owner.  Tiny houses are popular among singles and couples, young adults and retirees, and even some families.[3] The reasoning behind owning a tiny home may vary, but most agree that they’ve moved to a tiny home with hopes of redefining a life of quality. But are tiny house owners really reaching some kind of minimalist economic nirvana?

As suggested in ancient philosophy and proven through modern research, a “happy man [is] […] moderately supplied with the gifts of fortune [and does] the noblest deeds.”[4] This is a quote from Aristotle’s The Nicomachean Ethics. In various ways, Aristotle logically proves that rather than through material things, happiness is achieved by acting with virtue.[5] Once someone has the basic necessities of life and a little room for comfort, not much else in terms of material things will increase their level of happiness. A study in 2010 backs this theory, stating that “emotional well-being […] rises with income, but there is no further progress beyond an annual income of ~$75,000”.[6] This study proves that ultimately, past a point of basic well-being and comfort, material things cannot supply happiness. So in this case, the tiny revolution is justified.

Another positive to the tiny house movement is how cheap they are. The average purchase price of a single-family home is $290,000, whereas it costs about $23,000 build a tiny house.[7] Tiny homes are nearly 10 times less expensive than buying a normal home. Plus 68% of tiny house owners do not have a mortgage![8] Some supporters of the tiny house movement argue that rather than investing in a home and locking themselves into a mortgage, their money could be better spent in experiences, such as travel.[9] This falls in line with Aristotle’s views on happiness as being achieved through action rather than in material things.[10] In current times, the high cost of education and a sluggish economy are also deterrents for young people to lock themselves into debt or lose their mobility.[11] Tiny homes are an ideal solution to this dilemma, which may partly be why they are so popular among young people.

Rather than buying more material things, people seem to be more focused on durability and sustainable practice in marketing. Brands like Patagonia, which boast their eco-friendly and sustainable practices, are becoming increasingly popular. Patagonia also has a Worn Wear program, which is a free clothing repair service for Patagonia items based out of a van that tours the United States and Canada each year. Buying more durable and multi-use clothing means storing less in a limited space. Also, along with the idea of limited space, tiny homes have a smaller ecological footprint compared to larger homes. Because some tiny homes are mobile and therefore not connected to the electricity grid or municipal waste systems, these tiny homes run off of solar panels and have composting toilets. In general, though, tiny homes use 1/14 the lumber, 75% of energy in kilowatt-hours, and 7% of greenhouse gases emitted annually compared to normal-sized homes.[12] Clearly, the environmental advantages of living in a tiny home are tremendous. Among these radical changes, though, how is this affecting the economic system, especially in the United States?

One potential consequence of tiny homes in general would be less consumption, which comes about in several different ways. For the past few decades, the average American’s most prominent investment is their home. If a person’s home goes up in value, he or she will feel more confident about spending and borrowing more. If a person’s house goes down in value, he or she may feel less confident about spending and save more. If less people own real estate, especially if those people are the same age or have similar spending patterns, certain businesses and sectors of the economy may not have reliable predictions as to how much they should produce. Without this reliable source for predictions, businesses will find it difficult to match the demand of their market until they find ways to adjust.

As more people build their own tiny homes, there will be a decrease in demand for labor services oriented toward homes. People who have built their own home and can change their own light bulbs, fix their own sinks, and wire their own electricity will not need to hire someone to do that for them. Because there are approximately 117 million homes in the United States, a sizable percentage of the American workforce is in involved in the maintenance and repair of homes.[13] With fewer homes in need of serviced repair, the price for services will get competitively lower and hundreds of people will lose their jobs. Many of these people are immigrants to the United States that are here either illegally or with a work visa, so when their jobs are lost, these workers and their families face poverty and deportation- a grim end to their livelihoods as well as their economic contributions to the United States.

A huge part of the Gross Domestic Product (GDP) of the United States comes from consumer spending. The American economy relies heavily on massive and impulsive consumer spending, almost more so than anywhere else in the world. If people are purchasing items, though, they must have a place to put those items. In larger homes and properties, this is not an issue. But for someone who owns a tiny house, buying things must be carefully considered, since every little item takes up precious space. According to an article in US News, living in a small space such as a tiny home “requires you to rethink your entire relationship with stuff” and “is challenging because you don’t have as much space to hide your clutter.”[14] This mental shift and change in purchasing attitude will negatively affect the existing consumption model in the United States.

The minimalist movement may seem bad for the American economy in some ways, but although some things might change, it doesn’t necessarily mean that they are bad. Markets, technology, and trends change all the time, and in a relatively free economy like the one in the United States, these changes are an opportunity for growth. When trends arise, many creative and motivated people are geared to rise up to the challenge. In order to have these people to contribute to the economy, we need them to be happy. And that’s why, in ways both big and small, the pursuit of happiness is good for the economy.


 

[1] “Tiny House Movement: Living The Small Life.” What in the World Is Going On. December 31, 2013. Accessed May 03, 2016. https://followingworldchange.wordpress.com/2013/12/31/tiny-house-movement-living-the-small-life/.

[2] “Frequently Asked Questions.” Tiny House Community. Accessed May 04, 2016. http://tinyhousecommunity.com/faq.htm.

[3] “Profiles: Who Lives in Tiny Houses?” Portland Alternative Dwellings. Accessed May 04, 2016. https://padtinyhouses.com/tiny-house-profiles/

[4] Aristotle. “How to Find Happiness without a Free Lunch.” Edited by Bernardo Aparicio. Dallas: Ursuline Academy, 2016.

[5] Ibid.

[6] Kahneman, Daniel, and Angus Deaton. “High Income Improves Evaluation of Life but Not Emotional Well-being.” Proceedings of the National Academy of Sciences of the United States of America. August 04, 2010. Accessed May 04, 2016. http://www.pnas.org/content/107/38/16489

[7] Vermes, Krystle. “The Tiny House Movement and Its Impact on the Environment.” RecycleNation. April 10, 2015. Accessed May 04, 2016. http://recyclenation.com/2015/04/-tiny-house-movement-and-its-impact-on-environment.

[8] Ibid.

[9] Home and Garden Television. “Tiny House Big Living.” Advertisement. HGTV. May 02, 2016.

[10] Aristotle. “How to Find Happiness without a Free Lunch.” Edited by Bernardo Aparicio. Dallas: Ursuline Academy, 2016.

[11] Robinson, Jenna. “Little Boxes: Tiny Houses, Entrepreneurship, and Regulation.” Foundation Fro Economic Education. December 22, 2014. Accessed May 04, 2016. https://fee.org/articles/little-boxes/.

[12] Vermes, Krystle. “The Tiny House Movement and Its Impact on the Environment.” RecycleNation. April 10, 2015. Accessed May 04, 2016. http://recyclenation.com/2015/04/-tiny-house-movement-and-its-impact-on-environment.

[13] Obrinsky, Mark. “Quick Facts: Resident Demographics| NMHC.org.” National Multifamily Housing Council. 2014. Accessed May 04, 2016. http://nmhc.org/Content.aspx?id=4708.

[14] Mears, Teresa. “Could You Survive in 150 Square Feet? The Lowdown on Tiny Homes.” US News and World Report. June 18, 2015. Accessed May 04, 2016. http://money.usnews.com/money/personal-finance/articles/2015/06/18/8-factors-to-consider-before-joining-the-tiny-house-movement.

Photo Credit: Marti Sans, http://www.vocativ.com/culture/society/the-hipster-effect/

Advertisements

2 thoughts on “It’s Cool to be Poor: The Minimalist Movement and its Effect on the Economy

  1. I never have considered this topic and thought it was interesting to compare to what we have read this year. I think that at first, the tiny house movement will negatively affect the economy due to the job loss, as you mentioned, but in the end, those lost jobs will only turn into those necessary for the tiny houses such as the production of them or transportation, if needed. You also mentioned that a lot of the jobs lost will be those of immigrants. Because of this, if the movement is to gain widespread popularity, do you think that less people will immigrate to the United States in hopes of jobs? Consequently, how will this affect the economy. Not only will the U.S. be losing jobs, but it will also be losing a large portion of its workforce.

    -Allison Ingrum (Period 3)

  2. I have never thought about how a tiny house could affect so many areas of the economy. Aside from the obvious construction aspects that differ between tiny houses and “normal” sized houses, how tiny houses have shown to affect consumption is interesting. Getting a tiny house takes a big commitment and a change in mindset from what a lot of people are used to and with that comes the realization that they cannot continue to buy as much as they want when they want. It sounds like tiny houses put a constraint on consumption because the limited space requires owners to really think through each of their purchases. Perhaps buying a tiny house would lower consumption of material things but raise consumption or interest in traveling and other things that cannot necessarily come home with people, changing the things that people lean towards when thinking about their happiness.
    Olivia Osbourn, period 3

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s