8 ms·

The economics of the Birkin bag (2016)

70 points by gsatic 3y ago

psd1 3y ago
> Almost everyone can identify the provenance of Gucci’s double-G spangled Dionysus shoulder bag; only initiates can spot a Birkin. I bet some large majority can identify an Hermes bag as an expensive bag, logo or no. And perhaps more importantly, there are circles on which an obvious G, LV or C is infra dig. It is a sign of a deprived childhood. So yes, the bag is absolutely about conspicuous consumption.
- hospitalJail 3y ago
  I hope one day people are free from the grip of Veblen goods. Its probably impossible due to genetic causes, like a demand for status. However we may be able to educate people that 'you cannot buy class'. Its interesting how many lower income people have iphones, Jordans, Teslas/Mustangs/Corvettes but as soon as you hit the upper-middle class, these disappear in favor of the more practical/functional items of similar prices. Not to say that some in the upper-middle class don't waste money on a Ferrari/Lambo, but I imagine its the same thing, 0.1ers don't buy those products.
  - JohnFen 3y ago
    There's some fascinating class-based spending behavior I was taught in school decades ago. I have no idea how valid it still is, but I presume nothing much has changed. What I remember finding the most curious on first glance is that people in the lower-upper income group are the most likely to be bankrupt within five years of hitting that income band. Bu the explanation made sense to me: at that income level, you begin to compare your lifestyle to those who are much wealthier than you are, so you feel poor by comparison. Therefore you're more likely to start spending at rates that the income level can't actually sustain, in an attempt to live like the wealthier people you have begun to compare yourself to.
    - paganel 3y ago
      I think what you're describing is very similar to the Diderot effect [1], which has been discussed in here several times (I'm too lazy to search for those threads, but that's how myself have learned about it): > The Diderot Effect is a phenomenon that occurs when acquiring a new possession leads to a spiral of consumption that results in the acquisition of even more possessions. In other words, it means that buying something new can cause a chain reaction of buying more and more things because the new item makes one feel like one needs other things to go with it or to keep up with it. This can lead to overspending and accumulating more possessions than one actually needs or uses. [1] https://en.wikipedia.org/wiki/Diderot_effect https://en.wikipedia.org/wiki/Diderot_effect
      - geodel 3y ago
        This is very true in my case. And I have justified this in multiple forms. First, I really need it, then its been proven over years I didn't use much. Later I purchased more stuff, reasoning being This is my last hurrah, buy it even if I don't need it, in few years I will have no desire left to buy anyway. This didn't have disastrous effect as most purchases were smaller kitchen tools (<100 dollars) and most expensive was computer ( < 2500 dollars). After that I've been little more conscious.
  - Cockbrand 3y ago
    In case you're not quoting from it anyway, I'd recommend the book "Class" by Paul Fussell. It's a bit outdated, and often not really serious, but it takes this kind of observation quite far.
    - bamfly 3y ago
      I've found it remarkably useful, despite often being a bit tongue-in-cheek. The insight on mirrored surfaces was especially interesting. I remember seeing a staged photo of some Trump kid & spouse with their own kid playing in a living room with a spotless mirrored table and was like "oh, hey!" Lots of fun bits like that. ... Actually, the entire Trump thing was fascinating with Fussell's instruction guiding one's experience of it. "Prole" fit on expensive suits. Middle-as-fuck taste in home decor ("if you're rich it means everything's huge and covered in gold, right?"). Still haven't figured out how much of it's genuine and how much of it's an affectation for marketing/personal-branding reasons. He got his hope-for-the-future "Class X" all wrong—just an upper-middle youth fashion wave, mostly—but otherwise it's still a surprisingly-useful tool for analysis, considering how old and half-jokey it was.
      - 0cf8612b2e1e 3y ago
        What was the insight about mirrored surfaces? Makes place appear bigger? More annoying to keep clean? Ensure shiny things are frequently visible?
        bamfly 3y ago
        > More annoying to keep clean? Looks shitty if it's even slightly dirty, gets dirty if you so much as look at it, requires very thorough cleaning to make it look good (no smudges or streaks). Means you don't do your own cleaning—like, at all. Once-a-week housekeepers can't keep a mirrored coffee table looking tidy. Probably also helps if you have whole rooms you barely use, but even dust'll have it looking shabby faster than, say, wood. If you buy such a piece and do your own cleaning—and especially if you actually use it—you'll probably regret it in a matter of days. It's the kind of thing someone without that can only own (without it looking way worse than almost any alternative material) if they're so dedicated to it that it'll be the thing people remember about them. "Aunt Gertrude and that damn table. You remember that? Wouldn't let anyone touch it, and damned if every time you came to visit, she wasn't cleaning it. She had a whole process. Drawer of different towels, three or four cleaning bottles she had to put on in order. One time my kid touched it with a cookie-greased hand and she saw me getting the Windex, nearly bit my head off."
  - ypzhang2 3y ago
    I doubt there is truth to the common trope that "REAL rich people don't buy X/Y/Z". Its a No True Scotsman argument. In actuality, Kelly / Birkin are appreciated by a wide spectrum of people, even folks who are "0.1%ers". Just like "0.1%ers" buy luxury cars. Hell, Bill Gates (a "0.1%er" squarely) basically lobbied for a law just so he can import a Porsche 959. Jerry Seinfeld has a huge car collection. If you want to argue "old money", Prince Harry has a Jaguar E-type and a F-Type. Luxury goods are enjoyed by the leisure class, period, because they have disposable income and like nice things.
    - deleted 3y ago
      [deleted]
    - psd1 3y ago
      Right, these cars are distinctive and conspicuous, but they don't have "Porsche" in repeating motifs all over the bodywork. It's the humungous branding that makes the LV and Gucci goods tacky.
  - deleted 3y ago
    [deleted]
  - qzw 3y ago
    I don't disagree with your overall point, but some of your examples are hardly Veblen anymore. Or perhaps we have very different definitions of upper-middle class. I live in what I consider an upper-middle class area, where median household income is about 3-5x the state's as a whole. Everybody has an iPhone and you can't throw a rock without hitting a Tesla/Mustang/Corvette. Jordans I won't comment on since I know nothing about sneakers, but I would argue the other brands are all no longer Veblen. My MIL used to buy only mid-range Samsung phones that would become slow or lose significant battery within a couple of years, necessitating a replacement. My wife finally talked her into getting an iPhone, and she's been using the same one for 4+ years and has no desire to replace it, because it's still working fine. And similarly for all the other people in my family and their iPhones. I personally still rock a Xs. So for us and millions of other people, iPhones are actually a better value than most alternatives. Similarly, the Mustang and Corvette are usually considered to be excellent values within their class. Sure they're toys, but they deliver a lot more performance per dollar than most fancier sporty cars. Tesla has been and arguably still is the best electric car brand. Add in the recent price reductions and the reintroduction of tax credits, some Tesla models now have final costs below the average new car price. Hardly a status indicator when you buy a car that costs less than many Hondas and Toyotas.
    - mucle6 3y ago
      If almost everyone has an iPhone/Telsa, but a few people don't, some people may begin to read it as a signal. In a sense, when veblen goods are popular in a community, they have become table stakes instead of status symbols. They're still veblen goods though even if they're table stakes. Because they became table stakes due to their price.
    - ghaff 3y ago
      I think we're getting away from the definition of Veblen goods in that it implies people wouldn't want a Tesla, Mustang, or iPhone as much if you cut the price in half. And that seems manifestly silly. On the other hand, I can absolutely imagine that a lot of the people who buy supercars would be less likely to buy a Lambo, given it's downsides, if it were something any upper middle-class household could afford if they wanted to.
  - mercutio2 3y ago
    You think iPhones are out of reach to poor Americans? Or that richer Americans don’t predominantly use iPhones? I think I agree with your point about who’s consuming positional goods, but… iPhones are a weird entry in your list of luxury goods.
  - steveklabnik 3y ago
    > Not to say that some in the upper-middle class don't waste money on a Ferrari It is not actually possible to directly buy the fancy Ferraris. No matter how much money you have. It's a whole thing. You don't call them, they call you.
    - westoque 3y ago
      same with high end luxury watches. i think that these companies just add another layer on top of the standard veblen goods definition making it even more exclusive/desirable, and therefore even harder to get one.
  - adamsmith143 3y ago
    >Its interesting how many lower income people have iphones, Jordans, Teslas/Mustangs/Corvettes Yeah all those food stampers buying Corvettes and Teslas is so annoying. Lolwut
  - gamblor956 3y ago
    Upper-middle class people can't afford Ferraris or Lamborghinis. If you can afford either of those cars, which start in the six-figures, you are not middle class, you are very definitely upper class. You can't even get on the list to buy one of these cars without a bank account balance in the 7 figures. Also...every major wireless company offers iPhones free or heavily discounted. iPhones aren't the luxury goods anymore, they're the cheap alternative.
    - skibble 3y ago
      Your comment about iPhone build quality is as anecdotal as they come. Here's my counterpoint anecdotal take: I've had pretty much every iPhone model since the iPhone 3G, and the tiny number of issues I've had have been straightforward (a free screen replacement as a result of a publicly acknowledged issue, for example). I also work in the repair sector (not for Apple), and have seen absolutely no evidence to support your claim that iPhones are dying left and right. When Apple do entire device replacements, this is simply because for weird issues it's a quicker and easier on-the-spot resolution for both the end user and the Genius Bar than spending days depriving the owners of pretty vital devices trying to reproduce odd issues. Articles abound detailing how exacting Apple are with suppliers, e.g: https://www.theverge.com/23743095/apple-watch-band-release-x206-assembly-button-of-the-month https://www.theverge.com/23743095/apple-watch-band-release-x...
    - seabass-labrax 3y ago
      From vodafone.co.uk: Samsung Galaxy A14 5G - £15 per month + £9 upfront £563 in total (3yrs no inflation) Apple iPhone 11 - £32 per month + £19 upfront £1191 in total (3yrs no inflation) The iPhone 11 is being sold for £480 on Amazon - I'm struggling to see where the heavy discount is.
      - bluedino 3y ago
        In the USA, pre-paid providers offer the iPhone 11 for $49 https://www.boostmobile.com/stores/offers?intcid:HP:BF:Banner:iphone11instore https://www.boostmobile.com/stores/offers?intcid:HP:BF:Banne...
  - ke88y 3y ago
    > iphones As an ex-Android user who held out as long as I could: these aren't a Veblen good. 1. iphones aren't meaningfully more expensive than android alternatives, except at the very bottom of the market, and even then the difference isn't huge, even for lower income earners, when you finance. 2. There are actual product differentiators between Apple and Android. There are very real issues like privacy and app availability/quality; even when an Android version of an app exists, it's not always as functional. 3. But far more importantly, the newest range of Pixel phones are absolute garbage and barely work. After two top of the line androids in less than a year, I got sick of missing text messages and dropping phone calls because of shitty software. I was forced to switch to a (cheaper!) iphone. > ...as soon as you hit the upper-middle class, these disappear in favor of the more practical/functional items of similar prices. iphones are also an exception to this rule.
  - pfisherman 3y ago
    Jordans are not Veblen goods. They are entry level sneakers. Enough to set you apart from the sketchers wearing squares, but they are not margielas or visvims.
- addcommitpush 3y ago
  The very next sentences explain why this is about conspicuous consumption: > The authors of “Signalling status with luxury goods: the role of brand prominence”, which appeared in the Journal of Marketing in 2010, do so by dividing the rich into two groups: “parvenus”, who want to associate themselves with other rich people and distinguish themselves from have-nots, and “patricians”, who want to signal to each other but not to the masses. They theorise that more expensive luxury goods, aimed at patricians, will have less obvious branding than cheaper ones. Sure enough, they found that Gucci and Louis Vuitton charge more for quieter handbags and Mercedes slaps bigger emblems on its cheaper cars. People who cannot afford luxury but want to look as if they can (“poseurs”) go for big logos: counterfeiters usually copy louder goods.
  - arethuza 3y ago
    I think this point is made in Succession where Tom (who is, of course, the most social climbing member of the clan having married into the Roy family and is the only person in the show who actually makes a point that being rich is awesome) comments on the "ludicrously capacious" bag of the friend of his sidekick. What is deeply amusing is that the whole "ludicrously capacious" meme has taken off to the point where you can buy large bags with "ludicrously capacious" on them.
- margalabargala 3y ago
  > I bet some large majority can identify an Hermes bag as an expensive bag, logo or no. Not to the extent you'd think, I bet. The designs of the Hermes bags are designs that have been widely copied by far less expensive manufacturers. I went on the Hermes site and looked at some bags (they don't show prices on their website), then looked up the prices of the bags. They were all an order of magnitude more than I would expect for the item I was looking at. So, sure, most people could look at a bag and think "That bag cost hundreds of dollars". But I don't think that most people could look at the bag as think "that bag costs thousands of dollars". Spending several thousand dollars on a handbag is so far outside the realm of normal for people that it wouldn't occur to them that it would be that expensive.
tivert 3y ago
https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gucci-superfake-handbags.html https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gu... (Inside the Delirious Rise of ‘Superfake’ Handbags) > This led me to a Reddit community of replica enthusiasts, who traded details about “trusted sellers” capable of delivering a Chanel 2.55 or Loewe Puzzle or Hermès Birkin that promised to be indistinguishable from the original, and priced at a mere 5 percent or so of the M.S.R.P. > ... > What was once a sly novelty has bloomed into a gigantic market. In 2016, a Virginia woman was sentenced for buying $400,000 worth of designer purses from department stores, returning high-quality knockoffs and reselling the real bags for profit; the stores went years without catching on.
- mighmi 3y ago
  > This led me to a Reddit community of replica enthusiasts, who traded details about “trusted sellers” capable of delivering a Chanel 2.55 or Loewe Puzzle or Hermès Birkin that promised to be indistinguishable from the original, and priced at a mere 5 percent or so of the M.S.R.P. There are amazing counterfeit watched to be had. For better or worse, suits don't work like this. Instead, you find a Tailor in Vietnam or Colombia, who will make you something great for $2-300. But the best materials/fabrics aren't accessible without paying thousands. That said, these days, I rarely have the opportunity to wear suits.
  - Zircom 3y ago
    Do you have to travel to those countries to get fitted or you just send them the measurements and have it shipped to you?
    - whynotmaybe 3y ago
      My tailor from Thailand flew in to Brussels and I met him at an hotel where he took my measurements. A few weeks later, the suits were shipped directly to my home. He also had several customers in Germany and did the same for them.
    - marssaxman 3y ago
jareklupinski 3y ago
> But as Solca observes, there are good commercial reasons why rationing by queue rather than price can make sense. > First, it gives Hermès a buffer: even if demand drops, sales will not. > Second, it creates surplus demand for the bags, which overflows into demand for other Hermès products. Much of the firm’s business consists of selling consolation prizes: wallets, belts, beach towels and so on. As J.N. Kapferer of the Inseec Luxury Institute in Paris observes, the wait induces “impatient buyers to switch to other products of the brand, to calm their hunger until the much-awaited object of desire is achieved.” > Third, although market-clearing prices might raise profitability in the short term, in the long run they would drive French women away, leaving nouveaux riches from the developing world as the bags’ main buyers. If elegant Parisiennes lose interest, so, eventually, will women who aspire to be like them. 'economics' would make more sense if offered as a humanities course
- HDThoreaun 3y ago
  Veblen goods are a topic that is covered in the first semester of any serious econ program. Buying them is perfectly rational and can be modeled mathematically.
  - morelisp 3y ago
    At this point, an economist would tend to usher in the argument made by Thorstein Veblen... Yet in a couple of ways, Birkins do not look like classic Veblen goods.
    - davidw 3y ago
      So it's not econ 101. That's what makes it interesting and noteworthy?
  - paulette449 3y ago
    Veblen Goods sounded a lot like Giffen goods which were covered in the economics module of my CS degree. I had to check, they're related [1]: "... both Veblen and Giffen goods have an upward-sloping demand curve. This means that demand for them increases when their price increases. Their main difference is in the type of good. Veblen goods are luxury items that connote status in society, such as cars, yachts, fine wines, celebrity-endorsed perfumes, and designer jewelry. Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them." [1] - https://www.investopedia.com/terms/v/veblen-good.asp https://www.investopedia.com/terms/v/veblen-good.asp
iamben 3y ago
A long time since I read it, but Michael Tonello's memoir "Bringing Home the Birkin" was a fun and easy read. Long and short, he figured out how to skip the waiting lists, buy the bags and flip them for profit. https://www.amazon.co.uk/Bringing-Home-Birkin-Pursuit-Coveted/dp/0061473340/ref=sr_1_6 https://www.amazon.co.uk/Bringing-Home-Birkin-Pursuit-Covete...
jkuria 3y ago
Notice how this is stolen content? Nigerian blog stealing The Economist content.
- wmf 3y ago
  The Economist is a Veblen good; most people can only afford knockoffs.
  - ncpa-cpl 3y ago
    I once had the delivery list of the subscribers in my city, because the postman accidentally handed the list to me, and it was the wealthiest families of the city, a university and the embassies.
- dang 3y ago
  Yikes - fixed now. Submitted URL was https://businessday.ng/life-arts/article/the-secret-economics-of-the-birkin-bag/ https://businessday.ng/life-arts/article/the-secret-economic.... Thanks!
GoofballJones 3y ago
I've heard of them, but never investigated anything about them. I just now looked them up and new ones are selling for like $20,000. I don't think I'm their target consumer.
kyleblarson 3y ago
I'll stick with my Crocs, 10 year old hiking backpacks and Timex iron man watch that I got when I was about 12.
- permo-w 3y ago
  for my 18th Birthday I got a Timex. when I turned 21 I got a new watch and put the Timex away. almost exactly two years later I was going clearing out my room and was absolutely shocked to find it was still going and correct to within a minute. unfortunately the strap that came with it wasn't quite so long-lasting
  - someguydave 3y ago
    Quartz oscillators are quite accurate, even cheap ones - especially if they are kept at constant temperature.
- ke88y 3y ago
  > hiking backpacks Outdoor-themed Veblen goods are the new hotness for certain segments of the upper middle class. Yesterday I saw a guy with a haulbag... themed?... backpack that had a laptop sleeve and couldn't help but giggle. Remote work is great but taking a conference call from Big Sandy seems a bit silly, lol. (At least it's only $99 which actually isn't bad at all for a quality backpack, but still.)
  - metaphor 3y ago
    Had a conversation with a friend the other day where these backpacks[1] were brought up. After reading your remark, I now see what these list prices are really aiming at. [1] https://www.goruck.com/collections/rucksacks https://www.goruck.com/collections/rucksacks
  - arethuza 3y ago
    I've seen Louis Vuitton branded skis for sale - I think they were 12,000 Euros.... don't know if that included bindings!
er4hn 3y ago
The part about the margins always annoys me. They are comparing final cost to cost of goods + labor to manufacture, but there are other components than that. There is the cost of stores, of store staff to sell you the bag. The executives salaries who do not make the bags themselves. This comes up in tech as well. The cost to manufacture, say, a CPU, is very low compared to how it is sold. But you are paying for a lot of R&D that guided the CPU design. How are these things factored in? I'm sure that there is a word for this factoring in of R&D, mgmt, and other costs, but I don't know what the term is to start learning more. Does anyone else know?
- ke88y 3y ago
  The word amortize -- "gradually write off the initial cost of (an asset) over a period" -- denotes exactly this concept in the English language. As in, "the market price of a CPU includes amortization of the initial R&D effort over the lifetime sales of the CPU". The problem is that it means something more specific to accountants and lawyers in practice.
- deleted 3y ago
  [deleted]
m463 3y ago
I don't mind knockoffs if the originals are drastically overpriced. https://en.wikipedia.org/wiki/Emeco_1006 https://en.wikipedia.org/wiki/Emeco_1006 https://en.wikipedia.org/wiki/Rolex_Submariner https://en.wikipedia.org/wiki/Rolex_Submariner https://en.wikipedia.org/wiki/Eames_Lounge_Chair https://en.wikipedia.org/wiki/Eames_Lounge_Chair

70 points by gsatic 3y ago

psd1 3y ago

> Almost everyone can identify the provenance of Gucci’s double-G spangled Dionysus shoulder bag; only initiates can spot a Birkin. I bet some large majority can identify an Hermes bag as an expensive bag, logo or no. And perhaps more importantly, there are circles on which an obvious G, LV or C is infra dig. It is a sign of a deprived childhood. So yes, the bag is absolutely about conspicuous consumption.

hospitalJail 3y ago
I hope one day people are free from the grip of Veblen goods. Its probably impossible due to genetic causes, like a demand for status. However we may be able to educate people that 'you cannot buy class'. Its interesting how many lower income people have iphones, Jordans, Teslas/Mustangs/Corvettes but as soon as you hit the upper-middle class, these disappear in favor of the more practical/functional items of similar prices. Not to say that some in the upper-middle class don't waste money on a Ferrari/Lambo, but I imagine its the same thing, 0.1ers don't buy those products.
- JohnFen 3y ago
  There's some fascinating class-based spending behavior I was taught in school decades ago. I have no idea how valid it still is, but I presume nothing much has changed. What I remember finding the most curious on first glance is that people in the lower-upper income group are the most likely to be bankrupt within five years of hitting that income band. Bu the explanation made sense to me: at that income level, you begin to compare your lifestyle to those who are much wealthier than you are, so you feel poor by comparison. Therefore you're more likely to start spending at rates that the income level can't actually sustain, in an attempt to live like the wealthier people you have begun to compare yourself to.
  - paganel 3y ago
    I think what you're describing is very similar to the Diderot effect [1], which has been discussed in here several times (I'm too lazy to search for those threads, but that's how myself have learned about it): > The Diderot Effect is a phenomenon that occurs when acquiring a new possession leads to a spiral of consumption that results in the acquisition of even more possessions. In other words, it means that buying something new can cause a chain reaction of buying more and more things because the new item makes one feel like one needs other things to go with it or to keep up with it. This can lead to overspending and accumulating more possessions than one actually needs or uses. [1] https://en.wikipedia.org/wiki/Diderot_effect https://en.wikipedia.org/wiki/Diderot_effect
    - geodel 3y ago
      This is very true in my case. And I have justified this in multiple forms. First, I really need it, then its been proven over years I didn't use much. Later I purchased more stuff, reasoning being This is my last hurrah, buy it even if I don't need it, in few years I will have no desire left to buy anyway. This didn't have disastrous effect as most purchases were smaller kitchen tools (<100 dollars) and most expensive was computer ( < 2500 dollars). After that I've been little more conscious.
- Cockbrand 3y ago
  In case you're not quoting from it anyway, I'd recommend the book "Class" by Paul Fussell. It's a bit outdated, and often not really serious, but it takes this kind of observation quite far.
  - bamfly 3y ago
    I've found it remarkably useful, despite often being a bit tongue-in-cheek. The insight on mirrored surfaces was especially interesting. I remember seeing a staged photo of some Trump kid & spouse with their own kid playing in a living room with a spotless mirrored table and was like "oh, hey!" Lots of fun bits like that. ... Actually, the entire Trump thing was fascinating with Fussell's instruction guiding one's experience of it. "Prole" fit on expensive suits. Middle-as-fuck taste in home decor ("if you're rich it means everything's huge and covered in gold, right?"). Still haven't figured out how much of it's genuine and how much of it's an affectation for marketing/personal-branding reasons. He got his hope-for-the-future "Class X" all wrong—just an upper-middle youth fashion wave, mostly—but otherwise it's still a surprisingly-useful tool for analysis, considering how old and half-jokey it was.
    - 0cf8612b2e1e 3y ago
      What was the insight about mirrored surfaces? Makes place appear bigger? More annoying to keep clean? Ensure shiny things are frequently visible?
      - bamfly 3y ago
        > More annoying to keep clean? Looks shitty if it's even slightly dirty, gets dirty if you so much as look at it, requires very thorough cleaning to make it look good (no smudges or streaks). Means you don't do your own cleaning—like, at all. Once-a-week housekeepers can't keep a mirrored coffee table looking tidy. Probably also helps if you have whole rooms you barely use, but even dust'll have it looking shabby faster than, say, wood. If you buy such a piece and do your own cleaning—and especially if you actually use it—you'll probably regret it in a matter of days. It's the kind of thing someone without that can only own (without it looking way worse than almost any alternative material) if they're so dedicated to it that it'll be the thing people remember about them. "Aunt Gertrude and that damn table. You remember that? Wouldn't let anyone touch it, and damned if every time you came to visit, she wasn't cleaning it. She had a whole process. Drawer of different towels, three or four cleaning bottles she had to put on in order. One time my kid touched it with a cookie-greased hand and she saw me getting the Windex, nearly bit my head off."
- ypzhang2 3y ago
  I doubt there is truth to the common trope that "REAL rich people don't buy X/Y/Z". Its a No True Scotsman argument. In actuality, Kelly / Birkin are appreciated by a wide spectrum of people, even folks who are "0.1%ers". Just like "0.1%ers" buy luxury cars. Hell, Bill Gates (a "0.1%er" squarely) basically lobbied for a law just so he can import a Porsche 959. Jerry Seinfeld has a huge car collection. If you want to argue "old money", Prince Harry has a Jaguar E-type and a F-Type. Luxury goods are enjoyed by the leisure class, period, because they have disposable income and like nice things.
  - deleted 3y ago
    [deleted]
  - psd1 3y ago
    Right, these cars are distinctive and conspicuous, but they don't have "Porsche" in repeating motifs all over the bodywork. It's the humungous branding that makes the LV and Gucci goods tacky.
- deleted 3y ago
  [deleted]
- qzw 3y ago
  I don't disagree with your overall point, but some of your examples are hardly Veblen anymore. Or perhaps we have very different definitions of upper-middle class. I live in what I consider an upper-middle class area, where median household income is about 3-5x the state's as a whole. Everybody has an iPhone and you can't throw a rock without hitting a Tesla/Mustang/Corvette. Jordans I won't comment on since I know nothing about sneakers, but I would argue the other brands are all no longer Veblen. My MIL used to buy only mid-range Samsung phones that would become slow or lose significant battery within a couple of years, necessitating a replacement. My wife finally talked her into getting an iPhone, and she's been using the same one for 4+ years and has no desire to replace it, because it's still working fine. And similarly for all the other people in my family and their iPhones. I personally still rock a Xs. So for us and millions of other people, iPhones are actually a better value than most alternatives. Similarly, the Mustang and Corvette are usually considered to be excellent values within their class. Sure they're toys, but they deliver a lot more performance per dollar than most fancier sporty cars. Tesla has been and arguably still is the best electric car brand. Add in the recent price reductions and the reintroduction of tax credits, some Tesla models now have final costs below the average new car price. Hardly a status indicator when you buy a car that costs less than many Hondas and Toyotas.
  - mucle6 3y ago
    If almost everyone has an iPhone/Telsa, but a few people don't, some people may begin to read it as a signal. In a sense, when veblen goods are popular in a community, they have become table stakes instead of status symbols. They're still veblen goods though even if they're table stakes. Because they became table stakes due to their price.
  - ghaff 3y ago
    I think we're getting away from the definition of Veblen goods in that it implies people wouldn't want a Tesla, Mustang, or iPhone as much if you cut the price in half. And that seems manifestly silly. On the other hand, I can absolutely imagine that a lot of the people who buy supercars would be less likely to buy a Lambo, given it's downsides, if it were something any upper middle-class household could afford if they wanted to.
- mercutio2 3y ago
  You think iPhones are out of reach to poor Americans? Or that richer Americans don’t predominantly use iPhones? I think I agree with your point about who’s consuming positional goods, but… iPhones are a weird entry in your list of luxury goods.
- steveklabnik 3y ago
  > Not to say that some in the upper-middle class don't waste money on a Ferrari It is not actually possible to directly buy the fancy Ferraris. No matter how much money you have. It's a whole thing. You don't call them, they call you.
  - westoque 3y ago
    same with high end luxury watches. i think that these companies just add another layer on top of the standard veblen goods definition making it even more exclusive/desirable, and therefore even harder to get one.
- adamsmith143 3y ago
  >Its interesting how many lower income people have iphones, Jordans, Teslas/Mustangs/Corvettes Yeah all those food stampers buying Corvettes and Teslas is so annoying. Lolwut
- gamblor956 3y ago
  Upper-middle class people can't afford Ferraris or Lamborghinis. If you can afford either of those cars, which start in the six-figures, you are not middle class, you are very definitely upper class. You can't even get on the list to buy one of these cars without a bank account balance in the 7 figures. Also...every major wireless company offers iPhones free or heavily discounted. iPhones aren't the luxury goods anymore, they're the cheap alternative.
  - skibble 3y ago
    Your comment about iPhone build quality is as anecdotal as they come. Here's my counterpoint anecdotal take: I've had pretty much every iPhone model since the iPhone 3G, and the tiny number of issues I've had have been straightforward (a free screen replacement as a result of a publicly acknowledged issue, for example). I also work in the repair sector (not for Apple), and have seen absolutely no evidence to support your claim that iPhones are dying left and right. When Apple do entire device replacements, this is simply because for weird issues it's a quicker and easier on-the-spot resolution for both the end user and the Genius Bar than spending days depriving the owners of pretty vital devices trying to reproduce odd issues. Articles abound detailing how exacting Apple are with suppliers, e.g: https://www.theverge.com/23743095/apple-watch-band-release-x206-assembly-button-of-the-month https://www.theverge.com/23743095/apple-watch-band-release-x...
  - seabass-labrax 3y ago
    From vodafone.co.uk: Samsung Galaxy A14 5G - £15 per month + £9 upfront £563 in total (3yrs no inflation) Apple iPhone 11 - £32 per month + £19 upfront £1191 in total (3yrs no inflation) The iPhone 11 is being sold for £480 on Amazon - I'm struggling to see where the heavy discount is.
    - bluedino 3y ago
      In the USA, pre-paid providers offer the iPhone 11 for $49 https://www.boostmobile.com/stores/offers?intcid:HP:BF:Banner:iphone11instore https://www.boostmobile.com/stores/offers?intcid:HP:BF:Banne...
- ke88y 3y ago
  > iphones As an ex-Android user who held out as long as I could: these aren't a Veblen good. 1. iphones aren't meaningfully more expensive than android alternatives, except at the very bottom of the market, and even then the difference isn't huge, even for lower income earners, when you finance. 2. There are actual product differentiators between Apple and Android. There are very real issues like privacy and app availability/quality; even when an Android version of an app exists, it's not always as functional. 3. But far more importantly, the newest range of Pixel phones are absolute garbage and barely work. After two top of the line androids in less than a year, I got sick of missing text messages and dropping phone calls because of shitty software. I was forced to switch to a (cheaper!) iphone. > ...as soon as you hit the upper-middle class, these disappear in favor of the more practical/functional items of similar prices. iphones are also an exception to this rule.
- pfisherman 3y ago
  Jordans are not Veblen goods. They are entry level sneakers. Enough to set you apart from the sketchers wearing squares, but they are not margielas or visvims.
addcommitpush 3y ago
The very next sentences explain why this is about conspicuous consumption: > The authors of “Signalling status with luxury goods: the role of brand prominence”, which appeared in the Journal of Marketing in 2010, do so by dividing the rich into two groups: “parvenus”, who want to associate themselves with other rich people and distinguish themselves from have-nots, and “patricians”, who want to signal to each other but not to the masses. They theorise that more expensive luxury goods, aimed at patricians, will have less obvious branding than cheaper ones. Sure enough, they found that Gucci and Louis Vuitton charge more for quieter handbags and Mercedes slaps bigger emblems on its cheaper cars. People who cannot afford luxury but want to look as if they can (“poseurs”) go for big logos: counterfeiters usually copy louder goods.
- arethuza 3y ago
  I think this point is made in Succession where Tom (who is, of course, the most social climbing member of the clan having married into the Roy family and is the only person in the show who actually makes a point that being rich is awesome) comments on the "ludicrously capacious" bag of the friend of his sidekick. What is deeply amusing is that the whole "ludicrously capacious" meme has taken off to the point where you can buy large bags with "ludicrously capacious" on them.
margalabargala 3y ago
> I bet some large majority can identify an Hermes bag as an expensive bag, logo or no. Not to the extent you'd think, I bet. The designs of the Hermes bags are designs that have been widely copied by far less expensive manufacturers. I went on the Hermes site and looked at some bags (they don't show prices on their website), then looked up the prices of the bags. They were all an order of magnitude more than I would expect for the item I was looking at. So, sure, most people could look at a bag and think "That bag cost hundreds of dollars". But I don't think that most people could look at the bag as think "that bag costs thousands of dollars". Spending several thousand dollars on a handbag is so far outside the realm of normal for people that it wouldn't occur to them that it would be that expensive.

tivert 3y ago

https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gucci-superfake-handbags.html https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gu... (Inside the Delirious Rise of ‘Superfake’ Handbags) > This led me to a Reddit community of replica enthusiasts, who traded details about “trusted sellers” capable of delivering a Chanel 2.55 or Loewe Puzzle or Hermès Birkin that promised to be indistinguishable from the original, and priced at a mere 5 percent or so of the M.S.R.P. > ... > What was once a sly novelty has bloomed into a gigantic market. In 2016, a Virginia woman was sentenced for buying $400,000 worth of designer purses from department stores, returning high-quality knockoffs and reselling the real bags for profit; the stores went years without catching on.

mighmi 3y ago
> This led me to a Reddit community of replica enthusiasts, who traded details about “trusted sellers” capable of delivering a Chanel 2.55 or Loewe Puzzle or Hermès Birkin that promised to be indistinguishable from the original, and priced at a mere 5 percent or so of the M.S.R.P. There are amazing counterfeit watched to be had. For better or worse, suits don't work like this. Instead, you find a Tailor in Vietnam or Colombia, who will make you something great for $2-300. But the best materials/fabrics aren't accessible without paying thousands. That said, these days, I rarely have the opportunity to wear suits.
- Zircom 3y ago
  Do you have to travel to those countries to get fitted or you just send them the measurements and have it shipped to you?
  - whynotmaybe 3y ago
    My tailor from Thailand flew in to Brussels and I met him at an hotel where he took my measurements. A few weeks later, the suits were shipped directly to my home. He also had several customers in Germany and did the same for them.
  - marssaxman 3y ago

jareklupinski 3y ago

> But as Solca observes, there are good commercial reasons why rationing by queue rather than price can make sense. > First, it gives Hermès a buffer: even if demand drops, sales will not. > Second, it creates surplus demand for the bags, which overflows into demand for other Hermès products. Much of the firm’s business consists of selling consolation prizes: wallets, belts, beach towels and so on. As J.N. Kapferer of the Inseec Luxury Institute in Paris observes, the wait induces “impatient buyers to switch to other products of the brand, to calm their hunger until the much-awaited object of desire is achieved.” > Third, although market-clearing prices might raise profitability in the short term, in the long run they would drive French women away, leaving nouveaux riches from the developing world as the bags’ main buyers. If elegant Parisiennes lose interest, so, eventually, will women who aspire to be like them. 'economics' would make more sense if offered as a humanities course

HDThoreaun 3y ago
Veblen goods are a topic that is covered in the first semester of any serious econ program. Buying them is perfectly rational and can be modeled mathematically.
- morelisp 3y ago
  At this point, an economist would tend to usher in the argument made by Thorstein Veblen... Yet in a couple of ways, Birkins do not look like classic Veblen goods.
  - davidw 3y ago
    So it's not econ 101. That's what makes it interesting and noteworthy?
- paulette449 3y ago
  Veblen Goods sounded a lot like Giffen goods which were covered in the economics module of my CS degree. I had to check, they're related [1]: "... both Veblen and Giffen goods have an upward-sloping demand curve. This means that demand for them increases when their price increases. Their main difference is in the type of good. Veblen goods are luxury items that connote status in society, such as cars, yachts, fine wines, celebrity-endorsed perfumes, and designer jewelry. Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them." [1] - https://www.investopedia.com/terms/v/veblen-good.asp https://www.investopedia.com/terms/v/veblen-good.asp

iamben 3y ago

A long time since I read it, but Michael Tonello's memoir "Bringing Home the Birkin" was a fun and easy read. Long and short, he figured out how to skip the waiting lists, buy the bags and flip them for profit. https://www.amazon.co.uk/Bringing-Home-Birkin-Pursuit-Coveted/dp/0061473340/ref=sr_1_6 https://www.amazon.co.uk/Bringing-Home-Birkin-Pursuit-Covete...

jkuria 3y ago

Notice how this is stolen content? Nigerian blog stealing The Economist content.

wmf 3y ago
The Economist is a Veblen good; most people can only afford knockoffs.
- ncpa-cpl 3y ago
  I once had the delivery list of the subscribers in my city, because the postman accidentally handed the list to me, and it was the wealthiest families of the city, a university and the embassies.
dang 3y ago
Yikes - fixed now. Submitted URL was https://businessday.ng/life-arts/article/the-secret-economics-of-the-birkin-bag/ https://businessday.ng/life-arts/article/the-secret-economic.... Thanks!

GoofballJones 3y ago

I've heard of them, but never investigated anything about them. I just now looked them up and new ones are selling for like $20,000. I don't think I'm their target consumer.

kyleblarson 3y ago

I'll stick with my Crocs, 10 year old hiking backpacks and Timex iron man watch that I got when I was about 12.

permo-w 3y ago
for my 18th Birthday I got a Timex. when I turned 21 I got a new watch and put the Timex away. almost exactly two years later I was going clearing out my room and was absolutely shocked to find it was still going and correct to within a minute. unfortunately the strap that came with it wasn't quite so long-lasting
- someguydave 3y ago
  Quartz oscillators are quite accurate, even cheap ones - especially if they are kept at constant temperature.
ke88y 3y ago
> hiking backpacks Outdoor-themed Veblen goods are the new hotness for certain segments of the upper middle class. Yesterday I saw a guy with a haulbag... themed?... backpack that had a laptop sleeve and couldn't help but giggle. Remote work is great but taking a conference call from Big Sandy seems a bit silly, lol. (At least it's only $99 which actually isn't bad at all for a quality backpack, but still.)
- metaphor 3y ago
  Had a conversation with a friend the other day where these backpacks[1] were brought up. After reading your remark, I now see what these list prices are really aiming at. [1] https://www.goruck.com/collections/rucksacks https://www.goruck.com/collections/rucksacks
- arethuza 3y ago
  I've seen Louis Vuitton branded skis for sale - I think they were 12,000 Euros.... don't know if that included bindings!

er4hn 3y ago

The part about the margins always annoys me. They are comparing final cost to cost of goods + labor to manufacture, but there are other components than that. There is the cost of stores, of store staff to sell you the bag. The executives salaries who do not make the bags themselves. This comes up in tech as well. The cost to manufacture, say, a CPU, is very low compared to how it is sold. But you are paying for a lot of R&D that guided the CPU design. How are these things factored in? I'm sure that there is a word for this factoring in of R&D, mgmt, and other costs, but I don't know what the term is to start learning more. Does anyone else know?

ke88y 3y ago
The word amortize -- "gradually write off the initial cost of (an asset) over a period" -- denotes exactly this concept in the English language. As in, "the market price of a CPU includes amortization of the initial R&D effort over the lifetime sales of the CPU". The problem is that it means something more specific to accountants and lawyers in practice.
deleted 3y ago
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m463 3y ago

I don't mind knockoffs if the originals are drastically overpriced. https://en.wikipedia.org/wiki/Emeco_1006 https://en.wikipedia.org/wiki/Emeco_1006 https://en.wikipedia.org/wiki/Rolex_Submariner https://en.wikipedia.org/wiki/Rolex_Submariner https://en.wikipedia.org/wiki/Eames_Lounge_Chair https://en.wikipedia.org/wiki/Eames_Lounge_Chair