Culture Shift: Top Trends for 2009-

Summed up perfectly by Laura- Capitalism runs of self interest not trust or transparency. Guard yours carefully.

I think there is a far and wide incorrect perception of competence/fiduciary responsibility the general public has with private industry that still escapes me.

I've been trying to figure out why it still permeates. When are people going to understand, with the greater wealth creation in private industry comes the occasional tidal waves created by those who helped build and then sold you your boat in the first place.

Someone recently asked me if the current economic crisis has the power to change the way Americans think about money long-term -- the way the Great Depression shaped a generation of thrifty savers. There's no doubt the worst meltdown since the 1930s is shifting the culture; whether those changes endure beyond the credit crunch is an open question. But here are five trends to watch for in the year ahead:

1. Frugal is sexy.

Coupons are becoming more popular. But estimates suggest that just 2 percent of Americans actually redeem them, presumably because they worry that other people will view them as cheap or poor. In fact, Canadian researchers recently reported that the stigma about coupon-users is not only real but also extends to the people standing nearby.

Participants in four different experiments, published in the 'Journal of Consumer Research', perceived the people standing near the coupon-redeemer as cheap -- especially if the coupon was of low value (50 cents or less) and the two people knew each other. Interestingly, the stigma-by-association disappeared when the third party was highly attractive.

The choice here is clear: Always look your best while shopping, or accept the fact that you can randomly catch coupon-cooties -- so you might as well use them yourself (especially when the store offers to double them). Or better yet, do both, and you can help make bargain-hunting sexy.

2. A Downshift in Reference Groups

One reason people stumble into debt is social. Given the vast geographic and social mobility we enjoy in the U.S. (not to mention the ability to keep in touch with everyone we've ever known on Facebook), our reference groups often include friends with more money.

We tend to idealize the consumption of these friends, and then construct extravagant ideas about what we should consume ourselves, says Ron Wilcox, professor at the Darden School of Business at the University of Virginia, and author of 'Whatever Happened to Thrift: Why Americans Don't Save and What to Do About It.'

Most at risk for idealized consumption: the overeducated and underemployed, Wilcox says. "Education often defines who you spend your social time with," he says. "You may have someone who has a master's degree or a doctorate but they don't make that much money. They get invited to events that the cognoscenti attend. They go to art gallery openings. They know good wine from bad wine. Combine that with a lack of income and people get in bad trouble that way."

In this economic decline, watch for like-minded consumers to band together, forming clubs to trade financial tips or cut costs by splitting staples bought in bulk. Which brings us to...

3. Tighter Bonds Among the Neighbors

My neighbors and I have saved a fair bit of change on babysitters and kennels over the years by watching each others' kids and dogs. What I didn't realize is that these friendly exchanges may be good for our careers as well.

A new study finds that social interactions between neighbors are an important source of job referrals, especially if the neighbors are of similar age and education, and have children of the same age. Duke economist Patrick Bayer, Stephen Ross of the University of Connecticut, and Giorgio Topa of the Federal Reserve Bank of New York published their findings in the 'Journal of Political Economy' in December.

Examining 1990 Census data, the researchers looked at neighbors in the Boston area and found that residing on the same block (versus on nearby streets) increased the probability of working together by 33 percent. The "referral effect" benefits were greatest for neighbors who were well-matched in terms of education and age: Those men tended to earn 4 to 6 percent more, suggesting that they were finding better positions through their neighbors. There was no salary effect for well-matched women, but they were more likely to be in the workforce.

These days, instead of keeping up with the Joneses, maybe the Joneses can help you keep up.

4. Marketing to Uncertainty

With Americans worried about the fate of their jobs, homes, access to credit, retirement, and college savings accounts, it didn't take long for someone to come up with a marketing campaign that taps into mass anxiety.

Hyundai recently launched a promotion that allows consumers to return a vehicle they buy or lease within the first year if they lose their jobs involuntarily. The maximum benefit under the "Hyundai Assurance Program" is $7,500.

Watch for similar campaigns to tap other timely trends. Think about what's made you angry over the past year: bailouts for the irresponsible and incompetent; unfair penalties and fees; service plans that assault you with their complexity and thwart genuine price comparison; and the loss of hard-earned and hard-saved dollars in a no-place-to-hide financial meltdown. Watch for corporate America to respond with messages about security, quality, responsibility, fairness, transparency, and comfort.

One of the more insidious marketing strategies is one that exploits hyperopia -- an excess of farsightedness, or a tendency to plan too much for the future. Research has found that, as time passes, hyperopic people tend to regret their virtuous behavior and wish they had lived a little more.

The 'Journal of Consumer Research' recently ran an article entitled "Seize the Day! Encouraging Indulgence for the Hyperopic Consumer". Researchers at the University of Pittsburgh and Texas A&M suggest luxury goods companies can lure these tough customers by relating indulgent purchases to a positive long-term outcome.

In other words, beware the ad suggesting that buying a Lexus today will somehow be useful to you in retirement.

5. The Death of Trust

Finally, as Warren Buffett once said, "Trust is like the air we breathe. When it's present, nobody really notices. But when it's absent, everybody notices." That giant sucking sound you hear is the American investor, gasping for breath.

The lessons of the subprime mortgage debacle and the Madoff scandal are clear: Understand where and how your money is invested. Know the policies and fees of your bank, insurer, credit card company, and 401(k) service provider, because there will always be an inherent conflict between your goal -- building wealth -- and the goals of companies and advisors that earn money on your wealth.

In a recent op-ed, 'The Wall Street Journal' suggested that "capitalism runs on trust." But the truth is, capitalism runs on self-interest.

No broker will present you an investment or mortgage product without thinking of his or her commission. No rating agency will value the truth about an investment over the firm's profitability. No government agency chief or member of Congress will protect the individual investor from the abuses of financial services companies without pondering the impact on his or her future employment or campaign contributions.

And no Treasury bailout czar will demand accountability for hundreds of billions of your tax dollars being showered upon the drunken captains of industry who ran the ship aground to begin with. As a Government Accountability Office report noted in December: "The standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments."

If there is an object lesson that will shape this generation of savers and investors, it's one of betrayal. Capitalism runs on self-interest. Guard yours carefully.

by Laura Rowley