The Severed Future: How Economics Made Doomspending the Smart Choice

 

Buying overpriced lattes, designer bags and concert tickets whilst the economy is in turmoil. These doings, also known as doomspending, appear to look like pure reckless spending on the surface but they aren’t entirely unreasonable. What if doomspending isn’t irrational but is actually a logical response to an economy where homeownership and job security is out of the question? Three behavioural economics ideas help explain why doomspending isn't just about bad choices. Hyperbolic discounting, uncertainty, and information cascades show that it's actually a pretty logical response to an economy that's stopped rewarding people for waiting. The bottom line is that spending today might be the smartest move a young person can make.

Why Wait for a House That Won't Arrive? The Maths of Giving Up on Tomorrow

In the UK, inflation-adjusted house prices have risen by over 53% since 2000 from just under £178,000 to more than £272,000 in 2025 (Ebbs, 2024). 

Between 2000 and 2025, inflation-adjusted wages for the average UK worker have grown by just 14% from £34,200 to £39,039 (Crossley, 2025). That means a 10% deposit today would take a young person renting in a city nearly a decade to save, compared to just a few years later in their parents’ generation.

Faced with these numbers, traditional economics would still say save anyways, but behavioural economics offers a different explanation.

People are wired to grab smaller, immediate pleasures rather than wait for larger distant ones. That’s why we choose to spend £100 on concert tickets instead of putting it into a savings account that will grow over the year. Now applied to doomspending, if homeownership feels genuinely unreachable and waiting for a decade for a deposit still leaves you short, then the perceived value of saving that £100 drops close to zero. McKinsey & Company call this "financial defeatism": the belief that traditional milestones just aren't happening. Gen Z has a "severed relationship with the future" (Panas and Karlsson, 2023). Spending £100 today or a nice meal or designer clothing delivers guaranteed happiness right now. The alternative, a future payoff from saving, assumes that future actually arrives with a home one in it and for many young people, that assumption no longer seems safe. Putting these two options side by side, the rational choice, given the economic reality, is to spend.

That's not called recklessness. That's maximising utility under hyperbolic discounting.

The Logic of the “Illogical”: Why Doomspending Makes Sense

Opening any economics textbook, you will pretty likely encounter the so-called “Rational Agent”. This perfectly disciplined saver who always puts their future first. This person skips impulsive buyings, ignores flash sales and carefully plans for long-term goals. In theory, we are all supposed to have time consistency. For example, by valuing a house ten years from now just as much as we value a shopping spree today.

But let’s be honest for a second.

If you are a student in Manchester staring at a housing market that feels more like fiction than reality. Hence, that version of “rational” starts to fall apart pretty quickly. This is where bounded rationality comes in. Bounded rationality is the concept that human decision-making is rational only within limited constraints. This makes people choose the first option that is “good enough” rather than the absolute best for them (Ansari, 2023). In real life, we do not make perfectly optimised decisions as we make decisions that feel reasonable for the situation that we are in.

And for Gen Z, doomspending is not just poor self-control. It is a response to uncertainty.

If your mental expected utility tells you that owning a home is unlikely, then saving for it loses its appeal. Why sacrifice today for a future that feels unrealistic?

So instead, we shift our reference point from an unattainable future to what’s achievable now.

Doomspending is not just irrational.

In many ways, it is a rational response to a world that no longer feels predictable.

TikTok Made Me Buy It: How Cascades Amplify Consumption

Doomspending is not only shaped by individual psychology but also reinforced by what people see others doing online. This is where information cascades become important. In economics, an information cascade happens when people make decisions based not only on their own preferences, but also on the choices of others. When individuals lack complete information, following the others can appear rational.

For Gen Z, social media platforms such as TikTok and Instagram have turned spending into a public performance. Luxury purchases, “little treat” culture, shopping hauls, and personalized lifestyles are constantly displayed on screen. The scale of this influence is clear in the hashtag ‘TikTokMadeMeBuyIt’, which TikTok has described as generating tens of billions of views worldwide (Newsroom | TikTok, 2023), showing how product discovery is increasingly driven by social imitation rather than independent search.

Image via Stanley Instagram

Real-world examples make this even clearer. The Stanley Cup craze turned a simple reusable water bottle into a lifestyle symbol, with Forbes reporting that Stanley’s annual sales rose from about $75 million to $750 million by 2023 (Collins, 2024), largely alongside its viral TikTok popularity. Beauty products show the same pattern. L’Oréal’s Infallible Foundation is another example, with TikTok itself highlighting the product as part of the wider ‘TikTokMadeMeBuyIt’ trend that drove strong online attention and in-store demand (Newsroom | TikTok, 2021) .

Many doomspending purchases are social and symbolic. A designer bag, concert ticket, or expensive meal offers not only personal enjoyment but also signals identity, taste, and belonging. As more people display these choices online, others may start to see immediate consumption as a sensible response to an uncertain world. In this way, private spending becomes a socially validated trend. Social media does not create economic insecurity, but it does amplify how people respond to it.

The Only Rational Move Left on the Board

Maybe doomspending isn't a problem to be solved. Maybe it's a signal that something deeper has broken. Traditional economics calls spending irrational when the future offers better returns. 

But what if the future no longer offers better returns? 

Hyperbolic discounting explains why we grab present happiness when tomorrow looks bleak. Bounded rationality explains why "good enough" beats perfect optimisation. And information cascades explain why this spreads. Put together, doomspending stops looking like poor impulse control and starts looking like survival. 

When saving stops making sense, spending isn't the mistake—it's the only rational move left on the board. 

References

Ansari, S. (2023). Bounded Rationality. Economics Online. Retrieved April 20, 2026, from https://www.economicsonline.co.uk/definitions/untitled-9.html/

Ebbs, C. (2024). A History of UK House Prices Over Time. [online] Cladco.co.uk. Retrieved April 22, 2026, from   

https://www.cladco.co.uk/blog/post/history-of-uk-house-prices?srsltid=AfmBOoqJ2uoewnrUQBBeDM3CeliFbhJfP44zZtFiv6kABnNVno08kyFj

Crossley, D. (2025). Understanding the Average Wage in the UK: Trends Over the Last 25 Years and Inflation-Adjusted Comparisons. [online] Cleveraccounts.com. Retrieved April 22, 2026, from

https://cleveraccounts.com/blog/average-wage-in-the-uk.

Panas, A. and Karlsson, A. (2023). Mind the Gap: Urge to splurge: Why is Gen Z ‘doom spending’? [online] Mckinsey.com. Retrieved April 22, 2026, from

https://www.mckinsey.com/~/media/mckinsey/email/genz/2024/12/2024-12-17b.html.

TikTok newsroom (2023): Introducing the What’s Next Shopping Trend Report.
 https://newsroom.tiktok.com/introducing-the-whats-next-shopping-trend-report-ca?lang=en-CA

 Forbes (2024): Stanley Cup Craze Floods TikTok Feeds, Raises $750 Million In Revenue

https://www.forbes.com/sites/marcuscollins/2024/01/05/stanley-cup-craze-floods-tiktok-feeds-raises-750-million-in-revenue/

TikTok Newsroom (2021): Year on TikTok: Celebrating the Brands that Entertained and Sparked Joy amongst the Community.
             https://newsroom.tiktok.com/year-on-tiktok-2021-the-brands-that-inspired-us-ca?lang=en-CA