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> buy your girl that Gucci bag if she wants it Veblen goods [0] arguably create a real problem for the concept of markets being efficient. Essentially, the mar

> buy your girl that Gucci bag if she wants it Veblen goods [0] arguably create a real problem for the concept of markets being efficient. Essentially, the market signals feed on themselves, converting to hard-to-fake status signals, expending great energy at producing nothing: not as a byproduct, but as a primary effect. (Curiously, luxury goods share some DNA with Proof-of-Work cryptocurrency mining.) Don't get me wrong, markets beat communism and mercantilism by a country mile; but as economists like to remind us, economic models are fundamentally agnostic to what people want, and people are often incentivized to treat inefficiency as a feature rather than a bug. [0] https://en.wikipedia.org/wiki/Veblen_good https://en.wikipedia.org/wiki/Veblen_good

hirundo 7y ago
> Essentially, the market signals feed on themselves, converting to hard-to-fake status signals, expending great energy at producing nothing: not as a byproduct, but as a primary effect. Since this is about status rather than the goods, it can flip on a dime to asceticism when that becomes a high status good. Monk habits, Mao suits and military uniforms are also status goods, and all broadcast the expenditure of great energy that often produces nothing, or less. Buying less can be a status symbol almost as easily as buying more.
- UnFleshedOne 7y ago
  Only if and while the proles glut themselves on cheap stuff. As soon as unwashed masses start to copy that, the balance will flip and reverse. To act as a status symbol an action must be hard or costly to reproduce. If everybody can do it, it becomes worthless. I think similar dynamics plays out with currency, we could all still be using sea shells otherwise.
- lukifer 7y ago
  Scott Alexander wrote a great piece about counter-signaling; for instance, when expensive clothes become too accessible to the middle class, the wealthy can swerve by wearing cheap clothes as a counter-signal: https://www.lesswrong.com/posts/9kcTNWopvXFncXgPy/intellectual-hipsters-and-meta-contrarianism https://www.lesswrong.com/posts/9kcTNWopvXFncXgPy/intellectu... Signaling comes in many forms, and not all of it is bad; arguably, signaling eco-consciousness with a Prius or a Tesla can be a net win, even if it's just a proxy for socioeconomics. Rather, I would posit that extremes of Veblen goods (where cost and/or effort are abnormally high and positive social externalities are low) are more akin to market failure, or the Dutch tulip craze.

hirundo 7y ago

> Essentially, the market signals feed on themselves, converting to hard-to-fake status signals, expending great energy at producing nothing: not as a byproduct, but as a primary effect. Since this is about status rather than the goods, it can flip on a dime to asceticism when that becomes a high status good. Monk habits, Mao suits and military uniforms are also status goods, and all broadcast the expenditure of great energy that often produces nothing, or less. Buying less can be a status symbol almost as easily as buying more.

UnFleshedOne 7y ago
Only if and while the proles glut themselves on cheap stuff. As soon as unwashed masses start to copy that, the balance will flip and reverse. To act as a status symbol an action must be hard or costly to reproduce. If everybody can do it, it becomes worthless. I think similar dynamics plays out with currency, we could all still be using sea shells otherwise.
lukifer 7y ago
Scott Alexander wrote a great piece about counter-signaling; for instance, when expensive clothes become too accessible to the middle class, the wealthy can swerve by wearing cheap clothes as a counter-signal: https://www.lesswrong.com/posts/9kcTNWopvXFncXgPy/intellectual-hipsters-and-meta-contrarianism https://www.lesswrong.com/posts/9kcTNWopvXFncXgPy/intellectu... Signaling comes in many forms, and not all of it is bad; arguably, signaling eco-consciousness with a Prius or a Tesla can be a net win, even if it's just a proxy for socioeconomics. Rather, I would posit that extremes of Veblen goods (where cost and/or effort are abnormally high and positive social externalities are low) are more akin to market failure, or the Dutch tulip craze.