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analysis:economics:positional_goods

Positional Goods

Positional Goods are products or services that individuals use (buy and consume, we might say, and of course display) for the sake of demonstrating their status. Modern consumption is a significant part of the exceedingly complex, generally unspoken language of status which modern individuals engage in, generally without thinking much about it. So while it might be tempting to say many things about these goods, perhaps we should at least initially limit our observations to a few points.

In that very little we buy is purely for the sake of totally private enjoyment or to satisfy an entirely private need, we could argue that most goods have at least a positional element. And, in fact, it is possible to buy a positional good for the sake of demonstrating our status to no one but ourselves–we might buy a name brand food to eat alone for example, instead of the the store brand because we don't want to think of ourselves as the kind of person who buys the knock-off.

There are entire categories of products where the entire basis of the appeal seems to be positional. For example there are what we might call fake signal positional goods such as cheap copies of designer products, which generally come complete with a falsified label. Another example are Veblen Goods, named for the economist Thorstein Veblen who first described conspicuous leisure and consumption. Veblen Goods are those for which the demand paradoxically rises as the price goes up. This is in clear contradiction to traditional ideas of supply and demand, but makes sense if we realize that the whole point of owning Veblen Goods is to demonstrate the capacity to spend.

See also The Spirit Level, Luxury Fever.

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analysis/economics/positional_goods.txt · Last modified: 2013/07/15 08:30 by ram