Economic Tidbits


“Veblen argued that consumption is not merely about satisfying needs, but is also used to signal status and prestige. The priciest cars may offer more nifty features and a smoother ride than a cheaper marque, but the vast difference is price is not primarily down to such advantages. Rather, the buyer is paying such cars’ value as a status symbol, which derives from the fact that very few people can afford one . . . These luxury items defy normal economic logic. In the mass market, productivity boosting innovations that allow firms to sell better products at lower prices are a route to success. For producers of conspicuous-consumption items, such cost-cutting does not conquer the market but destroys it.” Free exchange: enough is never enough, The Economist, June 8th, 2019.

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