Tuesday, April 27, 2010

Conspicuous Consumption

In a recent read of mine (Thorstein Veblen's Theory of the Leisure Class), the author takes on describing the wealthy of the world. Though he spends most of the book working up a theory on which to base this, here's the argument:

Society is full of people who like to have power. People used to possess power by being physically strong. However, people now equate power with money. Unfortunately, merely having money isn't enough to show other people, due to invisibility of assets and various cultural taboos. So instead, people show that they are rich by buying things. Things that they don't need, and probably that nobody needs. (I'm looking at you, Maserati.) Veblen terms this "conspicuous consumption".

Quick case study: a $10,000 purse. The value of a purse is quite understandable, but models costing ten grand? Why do they exist? Because people want to show how much power they wield. A $10,000 purse isn't just a purse—it's a declaration. ("I have so much money that I can drop $10,000 on a purse.") This defines much of the "luxury market".

When purchasing something, if I think about how it will "make a statement" to someone (even me!), a red flag pops up in my mind. There are more important things than making statements.

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