In an effort to create better exercise and consistent writing habits this year, I recently read the book, Atomic Habits, by James Clear. To start a new habit, Clear shares that one of his favorite strategy is called habit stacking. After identifying a current habit that you already do each day, you stack your new desired behavior on top. In other words, you have a higher chance of succeeding if you pair your new habit with something that you already do, instead of starting your new habit in isolation. This is such a brilliant concept, and I have already seen the benefits of habit stacking in my personal and business life. On the other hand, I’ve also seen the opposite (negative) effect of habit stacking behavior in which the author says is called the Diderot Effect.
What is the Diderot Effect?
In Chapter 5 of his book, Clear shares a story about a French philosopher and co-founder / writer of Encyclopédie named Denis Diderot, who couldn’t afford to pay for his daughter’s wedding back in 1765. The Empress of Russia, Catherine the Great, heard of his financial troubles and offered to buy his personal library for £1,000 – more than $150,000 today – and also pay him a yearly salary to act as her librarian. Suddenly, Diderot seemed to have money to spare. He paid for his daughter’s wedding and purchased a scarlet robe for himself.
The robe was so beautiful that it was painfully obvious to Diderot how out of place it was around his simple possessions. Soon, he felt the need to upgrade all of his possessions. First, he got a new rug for the house. Next, he bought expensive sculptures for decorations. Then, he got a mirror to place above the mantel, a nicer kitchen table, a leather chair, and so on.
It’s scary to hear about, see, or be a part of the domino effect of one purchase leading to the second, third, and fourth purchases…
Reading this story made me visualize the falling of a long line of dominoes.
Clear shares that Diderot’s behavior is not uncommon and you can spot this pattern everywhere.
“The Diderot Effect states that obtaining a new possession often creates a spiral of consumption that leads to additional purchases.” – James Clear
Have you experienced this?
I have – and I didn’t realize there was a name for it!
Your Finances Are Out of Control Because of the Diderot Effect:
I want to share two examples of how the Diderot Effect completely got out of control in my personal and business life, with two purchases that I had limited to no experience or previous knowledge. It made me feel out of control with my finances, and I hate that. I take a lot of pride in creating detailed spreadsheets, budgets, and forecasts for expenses, and I felt that these two purchasing decisions launched what seemed like a never-ending string of additional expenses.
#1 – Personal Life Example:
My husband really wanted to get a Jeep for a variety of reasons back in 2017. We had a paid-off sedan that was in fantastic condition, but he cited multiple reasons for his case to get a Jeep. After weeks of fighting, I agreed to do a lease (while keeping the paid-off sedan) in hopes that this was a fleeting passion and hobby, and expecting (aka, hoping) to turn in the vehicle at the end of the lease in 39 months, or even sooner when he got bored of this new possession. He agreed to decrease and eliminate his personal spending allowance each month to be used for the monthly lease payments, and we would just need to find an additional $100 in the family’s budget to cover the rest. While this wasn’t ideal to me, I agreed.
Unfortunately, the monthly lease for this Jeep was just the beginning. I had no idea that getting this Jeep would open a Pandora’s box of never-ending things and upgrades that “needed” to be added to the Jeep to make it “usable.” Expenses within the first 12 months included:
- Rooftop Basket – to be able to load containers to store all the camping gear for the upcoming camping trip since the truck space of a Jeep is limited in size.
- Net – this would be used to securely keep our containers on the new rooftop basket.
- Locks – now that we had a car rack system, we needed to make sure no one could steal it.
- Bars – apparently we needed to get bars that would provide a base for attaching different gears.
- Container / Bin – I purchased a 20-gallon clear bin for storage of our camping gear and items, to be put on top of the new rooftop basket.
- Roll Bars – because he wanted to be able to take the doors off the Jeep, these handles were purchased for everyone to have something to grab on to and for protection in case of flipping over the Jeep.
- Mat – Given that the Jeep was going to be used for camping and such, floor mats were purchased to help keep it clean.
- Seat Recline Kit – because our kids are still in car seats, we found that the seat position was very uncomfortable for them for rides longer than an hour. This kit allowed the seats to be reclined.
- Grab Handles – I think this was a nice-to-have purchase. These solid steel grab handles allow you to enter and exit the Jeep more easily and comfortably.
- Headlights – the stock headlights that came with the Jeep were very dim and was bordering unsafe to drive at night. One night, I didn’t even think his headlights were on! He upgraded the headlights and fog lights.
- Side Storage Bags – My husband typically doesn’t like storing snacks and kid stuff in his Jeep, so this was his compromise. These storage bags are specifically designed to be built into the doors and frame of the Jeep.
- Door Off Mirrors – When taking the doors off the Jeep, this mirror relocation bracket allows you to have better visibility.
- Roof Box – While we first used plastic bin and containers on the first camping trip, we found that our stuff and toiletries got overheated and melted during the 3+ hour ride to the mountains. The roof box would also reduce drag and help for a smoother ride.
- Light Bar – even with the upgraded headlights, we found it still hard to see at night. This light bar is more like a bright spotlight and was definitely useful in the pitch dark on the windy mountain roads.
- Screw Bolts – these screw bolts were specifically made to be used with the light bar.
… I feel like I’m forgetting more items such as the home-made door rack that my husband made to store the Jeep doors when he removed them, but I don’t remember how much that cost since he got materials at Home Depot.
(*Note – I am really cringing right now after looking at this total cost that I calculated below.)
These were all purchases and add-ons to the Jeep within a one-year timeframe. I was NOT happy to say the least. I also didn’t realize that with a lease, we would still have to pay property tax on the vehicle. These expenses were not accounted for in the family budget because I had only added in the lease payments to our monthly budget. I have never owned a Jeep or known anyone who had, so I didn’t realize that obtaining this new possession would create a spiral consumption of additional purchases…which thanks to James Clear, I now know is called the Diderot Effect.
#2 – Small Business Example:
When I was getting ready to launch my first book, I was asked to be a sponsor for a business event. I was told that 300+ of my ideal audience and potential customers would be there, and it would be a great opportunity to be on stage for 5 minutes to get the word out about my upcoming book. My goal was to have the book make Amazon bestseller status on the first day of its launch, so after a few days of thinking about it, I agreed to be a keynote sponsor. Sponsoring this event cost me $750, which included my registration ticket, the keynote sponsorship, a ¼ page ad in the event journal, and 3 tickets ($300 value) that I could gift to clients or colleagues. While my budget was tight, I felt that this would be a good investment in my business and book.
Little did I know, becoming a sponsor would lead to the following additional purchases and expenses.
Additional Expenses to Consider When Sponsoring an Event:
- Graphics designer for print ad – I was told to submit a print ad to go in the event program. I love spreadsheets, but I am not an artist and do not know anything about creating ads. Two days before the deadline, I ended up going on Upwork to find and hire a graphics designer to design and create the print ad.
- Graphics designer for bookmarks – After the print ad was completed and submitted to the organizers, I was told that I would be able to put promotional swag out at each seat at lunch. I went back to the same graphics designer and asked him to create promotional bookmarks to share details about my book launch.
- Graphics designer for business cards – Since I was really impressed with the graphics designer who created my bookmarks and print ad, I hired him to re-design my business cards to fit the new colors and mission statement.
- Printed bookmarks – I sent the bookmark design to my local printing company to print 300+ copies.
- Printed business cards – I sent the business card file to my local printing company to print 300+ business cards that I could pass out to people at the event.
- Domain Name – As I was sharing the design of my bookmarks to my book marketing consultant, she suggested to create a unique website URL to promote the book, as opposed to my company URL. That lead to going onto GoDaddy to find available names and purchasing a domain name to promote my book, separate from my company homepage.
- Web Developer for website – Now that I had a new domain name, I needed to hire a web developer to create the website.
- Web Developer for landing page – In doing an early promotion of my book, I was told to create a landing page so people could sign up early to be notified when the book was available. My usual web developer was on vacation at this time, so I had to go on Upwork to find and hire another independent consultant for this new page.
- Raffle Prizes – I was asked to contribute my business services or products for the event’s raffle prizes and baskets.
… and the list felt like it continued.
As a financial coach for entrepreneurs, I felt like I was blind sighted by the string of expenses that followed agreeing to be a sponsor. Since it was my first time as a sponsor, I didn’t know what to expect and had no idea that a $750 investment would lead to almost a $1,000 worth of expenses to follow.
While my investment in a sponsorship became a classic example of the Diderot Effect, it was actually a great opportunity to be in front of my ideal audience. In fact, one of the participants reached out to me a month later for a paid speaking opportunity of my signature presentation, talking to her organization about the “7 Secrets to Financial Success for Small Business Owners.” Another participant told me a month later that she was really impressed with my storytelling from the introduction of my book. She shared tips on how to set up a successful book launch party, performed at my book launch party and book signings free of charge, and helped me get my books into the local bookstores.
Summary of Spiral Consumption and Purchasing Habits:
The lesson learned that I hope that you get from my personal and business experiences is to take 15 minutes to brainstorm what additional purchases could result from making one new purchase or investment. If this item is something that you have zero experience in, I highly encourage you to reach out to colleagues, friends, mentors, or post a question in a Facebook group or forum that you’re active in before making an expensive purchase.
Taking time to pause and gather more information before making the leap can help you avoid and eliminate that feeling of being out of control and draining your wallet and bank account before you realize that you just fell victim to the Diderot Effect.
Do you or someone you know suffer from the Diderot Effect? Do you see this happening in your business or personal life? If so, I’d love to hear from you. Post a comment and share with others!
4 Comments. Leave new
Hi Sylvia, thank you so much for this post–I’ve found the Diderot effect to be so true (I ate too many lunches out this week) and I now I have a name and an intention of being aware of it next time. I’m so glad we met at your “small business example,” and thank you again for sharing your personal/professional experiences–you help so many by doing so. You rock! ~Alice
Alice, so glad to hear this post was helpful! I will forever be grateful for meeting you at just the right time in my entrepreneurial and author path! You have been such a great mentor, colleague, and friend. Thank you for your time and advice in helping me with my book launch!
History just rhymes doesn’t it! Very interesting 🙂
Thanks for reading and commenting, Anna! Do you have any stories or examples of the Diderot Effect? 🙂