You spot something you want: maybe a new coffee maker, maybe an iPhone. But it’s too expensive, so you hold off. Two months later, the price drops, so you buy it. Nothing to see here—just Consumer Economics 101.
Sometimes, though, the exact opposite happens. The price of a good goes down, and then fewer people want it. Or the price goes up, and then it suddenly flies off store shelves.
Such is the counterintuitive fate of so-called Veblen goods, named for Thorstein Veblen, the economist and sociologist who coined the phrase “conspicuous consumption.” The most obvious examples are luxury goods like stratospherically priced wristwatches, designer handbags, and ancient bottles of wine. When you buy these goods, you get some utility—a $10,000 Rolex does tell time, after all—but you also buy the ability to broadcast a signal: Look what I can afford! As the price goes up, this signal gets amplified, making the good more desirable, at least to people in its target market.
More recently, evolutionary psychologists have posited that Veblen goods meet an inborn, animal drive to show off for potential mates. Male peacocks spend energy growing and maintaining inefficient, ostentatious tails; male humans, at least some of them, spend their bonuses on Porsches. And, one study found, this is a winning strategy for pursuing females with an interest in short-term flings.
Unfortunately for conspicuous consumers everywhere, a large body of research has confirmed that, however alluring Veblen goods might be, buying things, whether the newest iPhone or the newest Damien Hirst painting, reliably makes us less happy than buying experiences. Crucially, this includes not only luxury resort vacations, but also donations to pet causes. As life hacks go, it’s a tough sell for a peacock, but maybe—hopefully—a little easier for humans.
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