Wealth Why own possessions?
Mapping a New Value Economy
Length 33 minutes
Date Published 5th August
Podcast: Mapping a New Value Economy
Length 33 minutes
Date Published 5th August
In this item, Peter Firth, foresight editor at The Future Laboratory, is joined by Kenneth Cukier, data editor at The Economist, Simone Cipriani, founder of the Ethical Fashion Initiative of the International Trade Centre, and Debbie Wosskow, CEO of Love Home Swap and Chairman of Sharing Economy UK. In turn, these luminaries will shed light on how new values will shape the lives of the wealthy in the coming years.
Real estate, cars, antiques and fine art. These are the commodities that high-net-worth individuals (HNWIs) have traditionally sought to accumulate to signify their wealth.
But tomorrow’s luxury consumers will covet less tangible lifestyle assets such as time, health, data, reputation and wisdom.
Our research suggests that radical philanthropists, seekers of new physical and scientific frontiers, and compassionate social entrepreneurs, will increasingly dominate the world’s HNWI populations in the 2020s.
They will be on the front line of what will essentially be a giant identity crisis for the whole of mankind – where will true value manifest as it becomes increasingly clear that classic consumerism, the key driver of economic growth for two centuries, is a poisoned chalice that damages our societies and our environment?
As Alan Moore, author of No Straight Lines, says: ‘The crisis of consumerism is a crisis of meaning. People will be on a quest for identity, seeking a real authentic life through a spiritual connection to the world.’
In this future, our understanding of wealth and value will migrate away from the physical status symbol luxuries of the past. As Tom Savigar, senior partner at The Future Laboratory, says: ‘For better or for worse, we will commodify the intangible in our future society.’
‘It is becoming clearer that the most sought-after articles are no longer made of leather, lace, silver or gold, but are immaterial constructs such as time, online credibility and wisdom,’ he explains.
In this increasingly digital, complex and non-linear world, we predict that three new forms of wealth definition – time control, holistic health and digital reputation – will come to the fore in a shift that The Future Laboratory describes as a New Value Economy.
When The Future Laboratory asked a group of HNWIs in 2016 what they considered to be their biggest luxury, they overwhelmingly replied ‘time’.
Wealthy consumers will increasingly view time as a commodity to be hoarded and savoured while wrestling with the fact that the very process of asset accumulation often robs them of the chance to share it with those that they love the most.
Americans with higher incomes spend fewer evenings socialising with family and friends, and a smaller portion of their day in the company of others, according to Emory University and the University of Minnesota. Research by McKinsey identifies a senior corporate world in the midst of a ‘perennial time-scarcity problem’.
High-earners are clawing back the commodity of time by renegotiating how much they commit to their jobs. As their demand for a more flexible approach takes root, corporations including Ernst & Young are increasingly advertising their roles as ‘flexible’.
Senior job shares are on the rise too. Top-end job networks such as Capability Jane are creating markets for high-quality part-time roles and think tanks such as Job Share Project are examining the feasibility of executive job sharing.
Technology will increasingly be used by wealthy consumers in the years ahead to effectively control their experience of time and re-order their lives to change the balance between earning money and spending it on the things, and with the people, that they care about.
Google’s Timeful app shows this strategy in motion. It automatically micro-manages users’ work and leisure calendars to ensure that their important board meetings or client calls never clash with their dinner plans.
Similarly, office instant messaging service Slack points to a time-managed future by using an artificial intelligence assistant to answer work-related questions and manage projects to enable users to free up valuable time that they can use to pursue more creative and fulfilling work activities.
As growing numbers of the rich seek to devise lifestyle and technology strategies that enable them to plan their time more effectively, they will increasingly seek opportunities that enable them to extend their lifespan in the decade ahead.
A raft of technology scientists and entrepreneurs, bankrolled by wealthy investors, are pursuing projects that aim to extend lifespans. They range from Russian media mogul Dmitry Itskov’s 2045 Initiative, a non-profit organisation developing a global network of researchers in the field of life extension, to biomedical gerontologist Aubrey de Grey’s SENS Research Foundation, which examines medical innovations that slow or stop aging.
According to de Grey, the first person to live to 1,000 years is probably already alive.
‘There is an increasing number of people who are realising that the concept of anti-aging medicine that actually works is going to be the biggest industry that ever existed by some huge margin – and that it just might be foreseeable,’ he says.
Simone Cipriani, founder of the Ethical Fashion Initiative of the International Trade Centre, sees the ability to create time for the pursuit of personal enrichment as a key future marker of wealth. ‘Luxury is linked to scarcity, which will make time something that the wealthy will seek to control and manage to an ever greater degree in the future,’ he says.
It’s an age-old truism that having the money to finance a longer, more fulfilling existence is pointless unless you are healthy enough to enjoy it to the full. But it’s a concept that the rich and well-off are reconsidering thanks to advances in technology and thinking around wellbeing.
A body that stays beautiful well into old age and performs at its optimum level in the face of increasingly pressurised and demanding lifestyles is rapidly becoming a key luxury commodity.
In the future, it will no longer be the upmarket, bespoke clothes that maketh the man or woman, but the holistic health of their mind and body.
The wealthy are the most enthusiastic acolytes of current health and wellness trends, according to author Tom Corley, who has spent years studying the lifestyles of the rich and famous. In his Change Your Habits, Change Your Life book, he observes that 76% of wealthy consumers undertake some form of aerobic exercise for 30 minutes or more each day.
Rich people seeking to optimise their physical wellbeing are a driving force behind the £2.6 trillion ($3.4 trillion, €3 trillion) global wellness market, which is now three times larger than the worldwide pharmaceutical industry, according to the Global Wellness Institute.
The wealthy will also use digital technology to take a proactive approach to tackling mental and physical diseases and illnesses before they take hold.
An interesting example of how tomorrow’s technology will empower this approach can be found in the Eliza app, powered by the IBM Watson supercomputer, which analyses the thoughts and sentiments of users to build a detailed analysis of their psychological states in real time.
The app creates easily digestible infographics that provide a complete picture of a user’s mental health over time rather than an isolated snapshot gained by spending an hour in the therapist’s chair.
Future generations of wealthy people will be able to further commodify their health through the emergence of digital cryptocurrencies that enable them to directly translate physical activity into access to goods, services and experiences.
FitCoin is an intriguing example. The Bitcoin-style cryptocurrency from creative agency Chaotic Moon is created each time a user indulges in a fitness activity and can be spent on goods and services online. The agency is aiming to form partnerships with sportswear brands such as Adidas.
The Commercial Bank of Dubai (CBD) is making moves in this direction too, offering customers attractive interest rates and higher transaction limits in exchange for physical activities logged on Jawbone and Fitbit wearable tracking devices.
Reputation has always mattered to the wealthy. Ludicrously expensive courtroom battles have been fought over suggestions of personal or professional bad behaviour, and business empires have crumbled over the loss of a good name.
Over the next decade however, it will become even more important as the growth of online and collaborative consumption as one of the pillars of the global economy transforms a person’s digital reputation into a quantifiable commodity.
The prestige market has been slower to adapt to the sharing economy because the wealthy have traditionally valued ownership of products and services above access to them. Now however, a new breed of Millennial luxurian is beginning to see the charm of collaborative consumption and how their online reputation can enable them to access it.
As Brent Handler, CEO of members-only luxury destination club Inspirato, says: ‘What has become clear of late is that the luxury sharing economy is ripe for development. Collaborative consumption can exist and even flourish for high-end products and services, as long as the necessary amount of trust is established.’
Research by The Future Laboratory suggests that a growing realisation among the wealthy about the opportunities of service- and product-sharing will see the emergence of Social Capitalists – individuals who don’t feel the need to be rich in the classic sense of the word.
These people will instead use their online reputation, their vast social media audiences and global networks built up by learning, playing and working with influential friends and acquaintances, as a form of trading currency to obtain services and products from brands.
Alex Wolf, the founder of upmarket lifestyle brand Boss Babe, is an early example of a functioning Social Capitalist. She says that connecting with the right people is more useful to her than money in the bank, and gives her more confidence and access to the things that she wants in life.
‘One of the things that I talk about a lot is the importance of reputation in the information age. It’s about investing in yourself, and the importance of differentiating ourselves through our ideas, our creativity and our ability to connect.’
The maturing of the sharing economy will give rise to an increasing number of points-based systems that will enable the wealthy to optimise the commodity value of their social capital.
‘We are seeing a proliferation of other markets that work alongside the existing financial system,’ explains Joshua Klein, author of Reputation Economics: Why Who You Know Is Worth More Than What You Have. ‘There is all this untapped value that I have in my networks, in my knowledge, in my relationships, that I can now liberate to mobilise an exchange. When you have the option to do that, you become richer. I might have ‘X’ number of dollars in my bank account, but I have an untold potential value in terms of my network.’
Online services that measure and rank digital reputation and trustworthiness are emerging rapidly, and give an early indication of how tomorrow’s wealthy will demonstrate their social capital to the people that they wish to trade with.
Aggregation website Karma analyses feedback and reviews from users of sharing economy totems such as Airbnb, eBay and Foursquare to create an overall reputation score that serves as certification of a company’s trustworthiness.
Perhaps more tellingly, the Chinese government has announced that a Social Credit System that rates peoples’ trustworthiness will be mandatory for its citizens by 2020. The scheme is being piloted by Sesame Credit, a scoring system owned by e-commerce behemoth Alibaba.
Scores ranging from 350 to 950 points will be created from your online transaction history, and a good score means good perks. Those with a score of more than 600 can rent a car without needing to pay a deposit. Scores of 650 and above grant fast hotel check-out, and people with 700 points or more receive an exit visa to Singapore with minimum paperwork.
Science fiction writer and visionary William Gibson is credited with an observation that neatly sums up the emergence of a new kind of wealth: ‘The future is already here – it’s just not very evenly distributed.’
Amid global social, political, economic and environmental upheaval, the signs of a future New Value Economy are emerging in the advanced economies of Europe, the US and Australia.
Here the old markers of status, that is, ownership of the beautiful, the rare and the coveted, are being reconsidered by HNWIs who are part of a society that is embracing more intangible assets such as time, health and online credibility.
In the Asia-Pacific region, Africa and South America, traditional symbols of success and status continue to be treasured, and this behaviour will likely continue for several decades.
But levels of connectivity are accelerating at a faster rate than ever before, gathering the emerging economies into a global network of shared understandings and attitudes, and spreading the assumptions behind the New Value Economy to millions of consumers each year.
As digital increasingly becomes global king, the old signifiers of wealth will fade and lose their value, sense of meaning and definition among an emerging breed of young luxurians.
Money will still give the owners of old-style wealth an edge in their ability to buy themselves the increasingly treasured New Value commodity of time, enabling them, at least for the time being, to purchase more varied and perhaps even longer lives.
But very soon, those talented, clever and experienced enough to successfully manage the intricacies of an online reputation will be in possession of a new commodity that will begin to match the buying power of cold, hard cash.