Postrel on Positionality: “Just a Phase”
posted by Frank Pasquale
I was intrigued by Virginia Postrel’s latest article on conspicuous consumption. In her book The Substance of Style, Postrel seemed eager to discredit Veblen-inspired thought by claiming that it failed to “credit [luxury] goods’ intrinsic sensory appeal.” Now her position is more nuanced:
An African American family with the same income, family size, and other demographics as a white family will spend about 25 percent more of its income on jewelry, cars, personal care, and apparel. . . .African Americans spend much less on education, health care, entertainment, and home furnishings. (The same is true of Latinos.)
[E]conomists [have] compared the spending patterns of people of the same race in different states—say, blacks in Alabama versus blacks in Massachusetts, or whites in South Carolina versus whites in California. [A]ll else being equal . . . an individual spent more of his income on visible goods as his racial group’s income went down. African Americans don’t necessarily have different tastes from whites. They’re just poorer, on average. In places where blacks in general have more money, individual black people feel less pressure to prove their wealth.
The same is true for whites. Controlling for differences in housing costs, an increase of $10,000 in the mean income for white households—about like going from South Carolina to California—leads to a 13 percent decrease in spending on visible goods. “Take a $100,000-a-year person in Alabama and a $100,000 person in Boston,” says Hurst. “The $100,000 person in Alabama does more visible consumption than the $100,000 person in Massachusetts.” That’s why a diamond-crusted Rolex screams “nouveau riche.” It signals that the owner came from a poor group and has something to prove. . . . Rich people in poor places want to show off their wealth. And their less affluent counterparts feel pressure to fake it, at least in public. Nobody wants the stigma of being thought poor. [emphasis added]
Nevertheless, Postrel is at pains to convey that positional pressures are but a temporary problem. . . .
[This research] suggests why emerging economies like Russia and China, despite their low average incomes, are such hot luxury markets today—and why 20th-century Texas, a relatively poor state, provided so many eager customers for Neiman Marcus. . . Nobody wants the stigma of being thought poor. Veblen was right.
But he was also wrong. Or at least his theory is out of date. Given that the richer your group, the less flashy spending you’ll do, conspicuous consumption isn’t a universal phenomenon. It’s a development phase. It declines as countries, regions, or distinct groups get richer. “Bling rules in emerging economies still eager to travel the status-through-product consumption road,” the market-research group Euromonitor recently noted, but luxury businesses “are becoming aware that bling isn’t enough for growing numbers of consumers in developed economies.” At some point, luxury becomes less a tool of public status competition and more a means to private pleasure.
My question is–is Veblen’s theory really “out of date,” or merely limited to parts of the world less developed than, say, 21st century Texas? If the latter, then isn’t Veblen’s theory of luxury as display more generally applicable than Postrel’s theory of luxury as “private pleasure?” Certainly the idea of luxury is complex. But if standards of living for the developed world’s lower and middle classes stagnate or decline, I have a sense that Veblen’s theory will have more explanatory power even in the places where Postrel thinks it’s fading. As I’ve noted before, it’s hard to imagine an egalitarian glamor.
Photo Credit: Cobalt123, $9,000 Mont Blanc Pope Julius II Pen.
June 18, 2008 at 6:45 pm
Posted in: Consumer Protection Law, Economic Analysis of Law, Intellectual Property
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