All of us in this world live in a society. Society plays its part in shaping us, our choices, our mindset and our future, to an extent. In this society, each one of us plays two parts, one, as each one of us, individually (individualist) and two, as a society at large, collectively (collectivist). While it might be said that the former is a subset of the latter, it is true as well that the latter is hugely affected by the former. It is how it influences the buying decisions of all of us consumers in the market.

Individualism stresses the goals and the rights of all of us as a separate entity, as an individual. Driven by personal gains and rewards, an individualist person sets his/her own goals, may prefer working with autonomy as compared to working in a team and values personal independence.

Collectivism emphasises on the total sum of all the individuals as one single entity and values personal interdependence. What matters here is the group, the goals and the rights of the group. It keeps faith in the principle that ‘an individual rises, only when an organisation rises’ and that the goals of the organisation precede those of an individual. Driven by the desire to make the long-term collective relationship amongst the group work, a collectivist takes pride in the pride of the team’s success.

In an individualist environment, people are more likely to “see themselves as separate from others, define themselves based on their personal traits, and see their characteristics as relatively stable and unchanging”. Here, the sense of oneself minimizes whatever little effect do individualists have from the factors, things and the environment of the people outside and rather, is defined by who and how they themselves are on the inside.

In collectivist cultures, people are more likely to “see themselves as connected to others, define themselves in terms of relationships with others, and see their characteristics as more likely to change across different contexts”. Their sense of self is broadly defined in terms of who they are with, how all the people are and how their membership affects the group. Meeting social expectations, maintaining public harmony and getting along with others is what matters more.

Both sets of people have different expectations from themselves as well as from others. The idea of having a more private self is not as comforting to a collectivist as it is to an individualist. To a collectivist, it might seem alienating. Similarly, a collectivist idea of keeping everyone in the loop may tend to seem conformist to an individualist. These differences that are fundamental between Individualism and collectivism also affect the market, and hence, the economy.

Obviously, there are some combinations that go together like milk and cookies, tea and sugar, bread and butter amongst thousands of others, but at the same time, a study published in Psychological Science, by the Association of Psychological Science (APS) demonstrates that collectivists people tend to value the abstract relationship between the items more than that of particular items themselves. On the other hand, individualistic people tend to value the intrinsic value of items separately and hence, split up a full set of items. On a general note, the individualistic mindset is found most often in western Europe and the US, while the collectivist mindset is more prevalent in eastern cultures.

The APS conducted a series of experiments that led to surprising results. In the initial experiments, Anglo and Latino-Americans were asked to choose one favourite cell phone accessory set out of four different sets. After all of them picked one, the respondents were put in a situation where one of the items in the set that they chose was no longer available and were given two options to choose out of-

  1. They could replace the unavailable item in their set with the same item from another set
  2. They could choose a completely new set, the one that matched.

Likely to have a broad individualistic mindset, the Anglo-American students replaced the one which was unavailable with the same piece from another set rather than choosing a completely new set whereas the Latino-Americans students picked a completely new set of accessories. which showed that they viewed each set as one item and focused more on the inherent relationship that exists between them.

In further experiments, it was concluded that collectivists were more reluctant to break their set, more willing and comfortable to pay more to restore a set and finally, gave more compelling reasons to explain the importance of grouping all the items in one set together.

In a similar experiment when participants were asked to choose two puppies to suggest to a friend and later told that only one of them could be adopted due to unforeseen circumstances, collectivists thinkers were more inclined towards choosing a completely new set of puppies instead of splitting up with their favourite two.

Similarly, it was more commonly found amongst the collectivist thinkers that given the unavailability of their favourite snack combo, they were likely to pick up a completely new combo. Daphna Oyserman, Dean’s Professor in the Department of Psychology and of Education and Communication at the University of Southern California says “These choices seem odd until one considers what the collectivistic mindset does, …. It makes what would otherwise be two separate items feel like a single combined element.”

The researchers also suggest that these differences could be translated in the terms of public policy as well. “Our studies imply that an accessible collectivist mindset would reduce willingness to accept some chosen policy options if others cannot be obtained, which would reduce compromise,” the co-authors James A. Mourey and Carolyn Yoon of the Stephen M. Ross School of Business at the University of Michigan conclude.

In other experiments, it was found that these differences extended to views about the brand and its position in the marketplace as well. Individualists perceived a brand as stronger when it connects to his/her personal identity whereas collectivist consumers evaluate a brand as stronger when it appealed and was associated to the regional audience, which is why significant differences were also observed in the way the word of mouth is taken into consideration.

In an e-commerce platform study, it was observed that interdependence is more sensitive towards the endorsements by their peers. Students at a university in Hong Kong were seen to be inclined more towards a university bookstore when they were shown short endorsements from their fellow peers. These differences hence can predict distinct personal values and goals, power concepts, and normative expectations and are helpful in getting to know more about how consumers react in the market.

Read other articles in this Economics series:

Unseen link between religion and economy

Two C’s of destruction: Capitalism and Climate Change

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