Definition
A Veblen good is named for Thorstein Veblen, whose The Theory of the Leisure Class redefined how certain goods are understood. Briefly, a consumer good is one that obeys the laws of supply and demand: If the price goes up, demand drops.
A Veblen good, on the other hand, does not. It is deliberately priced to be expensive, and demand actually increases with price.
Put another way, consumer goods are commodities, where you might pay extra for, say, organic free-range chicken, but if its too pricy you'll just buy the house brand. On the other hand, if you want to demonstrate your success and social status, there's just no substitute for that Rolex, is there?
Indicators of Veblen goods
- An instantly recognizable design. The Submariner. The Louis Vuitton logo. Double-C Chanel. Mercedes Benz logo. This serves to make it obvious to others what you have and its indication of your status. This is also why those designs are frozen in time; the makers cannot change them without lessening the status value of the goods.
- As visible as possible, again to make others notice you possess it. There's a reason that most jewelry and luxury watches are high-polish and contain many reflective surfaces. Bling, in a word.
- Advertising, often with imputed sex appeal. Serves, again, to make sure people are aware of what you own and how they should view it.
- Steep price. A basic Rolex is, as of 2/2012, 8000USD, and has been raised regularly to keep it aspirational. Compare, for example, the Armida A2 at $650.
Confusingly, the sellers sometimes advertise based on features, in settings that imply sex and status. For example:
(Image credit: Rolex via The Prodigal Guide)
We humans are all about status and rank in the pack, so there's really nothing wrong with Veblen goods, I just like to know why I want to buy something. Is it an awesome watch, or a way to indicate alpha male? (Or both.)
And I should note that marketing something as a Veblen good works superbly.
