
Veblen goods - Uberphallus
https://en.wikipedia.org/wiki/Veblen_good
======
mattbierner
Interesting. I often find that my perceived 'luxuriousness' of a product
decreases the perceived value of it. Like I'm sure Rolls makes nice autos and
all that, but because they are created specifically to be high-end status
symbols, they become cheapened in my mind and therefore cannot truly be high-
end status symbols. A valuable good or experience is instead one that has an
authentic story (which is hard to judge), or is super niche and shows an
understanding and appreciation of the field, or is old and unique and
difficult to obtain.

I collect camera lenses for example and see people drop crazy money on old
Leicas. And they are nice lenses but it's such a stereotypical choice that I
can't help but negatively judge anyone who actually buys or aspires to them.
Their brand's mystique has cheapened them for me. And let's not even get
started on Hasselblad...

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Sohcahtoa82
I've never understood the desire to own things like Rolex watches.

It's a watch. It tells you what time it is. You can get a pretty durable one
that'll last you nearly a lifetime for under $100, especially if you get a
digital one since there's no moving parts to break.

So why spend $5,000+ on one? I mean, yeah you might want to get something
fashionable and shiny, but that doesn't require a $5,000 purchase.

I feel that the only reason to spend $5,000 on a watch is so that you can show
off to other people that you can afford to piss away $5,000 on a watch, which
is just silly.

~~~
throwawaymath
I own a $25,000 Lange & Söhne. While watches are a time-honored way of
signaling, I didn't buy it to show off. I've actually never met anyone who
recognized it, and off the top of my head I can't remember ever even getting a
compliment on it. I'd never buy a Rolex, because they're too loud :)

Here's the disconnect you're struggling with: you don't value watches. Or more
accurately, you don't appreciate them beyond simple utilitarian timekeeping.
That's fine, most people don't really care about them. Instead of trying to
relate to people who buy expensive watches by valuing watches - which you
clearly don't - relate to them through the broader experience of spending a
lot of money on a hobby.

Do you have any hobbies you spend "a lot" of money on, perhaps more than
what's required just to engage with the hobby? Keep in mind that "a lot" is
arbitrary. I have a friend who spends thousands of dollars on card games. I
don't see the appeal, but it makes him happy and trading card games can be a
fun activity. That hobby "doesn't require" a purchase of the most expensive,
collectible versions of various cards, but people do it anyway. I'm pretty
sure my friend doesn't do it to signal that he can spend that money :)

The point is this: what's expensive for one person is affordable for another,
and what's valuable for one person is frivolous for another. There's not much
beyond that. It's all relative - in principle it all comes down to whether or
not you spend strictly more than you need to on a thing so you can enjoy it
beyond its raw functionality. If you do, then you're no longer treating that
thing as a tool, you're treating it as a form of art. Like all forms of art,
expensive watches are polarizing and subjective, and they attract a subculture
of people who discriminate between things which seem utterly arbitrary to
people who don't appreciate them.

~~~
charlesdm
High five. They have nice watches. Which model do you own?

Jaeger-LeCoultre owner here

~~~
throwawaymath
1815 38.5mm in white gold, model 235.026. Funny you say that, because at the
time I was torn between the Lange and a Jaeger-LeCoultre Master Ultra Thin,
model 130842J. I like the form factor and complications of the JLC, but the
simplicity and movement of the Lange won out for me.

~~~
charlesdm
Nice watch! I have a JLC Master Ultra Thin Moon as my main watch, which I
absolutely love.

I tried the Ultra Thin, but I found it was a bit too thin for my wrist.

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duality
Sounds related to but subtly different from a
[https://en.wikipedia.org/wiki/Giffen_good](https://en.wikipedia.org/wiki/Giffen_good).

~~~
allenz
The difference is that Veblen goods are luxury goods whereas Giffen goods are
inferior goods
([https://en.wikipedia.org/wiki/Inferior_good](https://en.wikipedia.org/wiki/Inferior_good)).

~~~
jessriedel
Well, the mechanisms are generally different too. Giffen goods can exist even
for simple models with homoeconomicus. Veblen good generally involve a
signaling/status story.

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akeck
My theory about the meteoric rise in US undergraduate tuition since the early
1980s is that colleges and universities realized they could turn undergraduate
degrees into Veblen goods.

~~~
nemothekid
I don't think demand increases as the price goes up - only that colleges
realized demand for an undergraduate degree was inelastic and that consumers
could pay any price because they could get guaranteed loans from the
government.

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trhway
read some years ago in the context of high end speakers:

"so, you are're just packaging $500 of speakers in nice boxes and selling it
for $80K?"

"you don't understand. The people are paying for the price."

~~~
taneq
This is absolutely what happens. Once you go beyond a few $1000s of dollars,
you're paying for the privilege of demonstrating that you can afford to pay
that much for an entertainment center.

My father-in-law's like this. Every time he visits he tells us all about his
home theatre setup and how he's spent $15k on this component and $20k on that
other component, and that it was a bargain because it usually costs $35k but
he got a good discount because he's friends with the store owner. You bet he
is, with the stuff he buys! But hey, it makes him happy.

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dredmorbius
Veblen goods offer signalling opportunity, and must be _both_ immediately
cognisibly to the intended signalling audience (though not necessarially
others) _and_ high in cost in order to manifest credible signalling. They are
not _utility_ or _consumption_ goods, but _information_ goods.

They exist where the underlying trait being signalled is difficult to
communicate clearly or effectively, a circumstance especially true of social
status signalling. Paradoxically, the hyperwealthy need not signal so loudly
(they themselves are sufficiently well-known), but as one descends the ranks,
say, below the top ten and above, say, the 90%ile (higher or lower as you
prefer), that signalling becomes more necessary and costly.

This is similar to a whole set of fad-driven behaviours, ranging from speech
and etiquette to clothing, diet, music, politics, management, and programming
fashions, where the underlying domain is complex. Eventually the faad itself
becomes dominated by _poseurs_ whose false affectation dilutes the signal.

[https://old.reddit.com/r/dredmorbius/comments/62uroa/clothin...](https://old.reddit.com/r/dredmorbius/comments/62uroa/clothing_music_diets_art_management_theory_fad_as/)

Related, diamonds & gemstones, and loss or clear signalling effect as
inexpensive alternatives emerge. See earlier:

[https://news.ycombinator.com/item?id=17183929](https://news.ycombinator.com/item?id=17183929)

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arthurofbabylon
Can anyone recall this effect occurring with a software product?

~~~
asdignoionio
Apple software (kind of). It's tied to specific hardware, so it's hard to say
if people are paying for the software or the hardware.

I have seen people turn down free software because they mistakenly believe an
expensive program must be better. But that's not really the same, since that
isn't a form of showing off.

~~~
xevb3k
I really can’t see how that’s so. Your suggesting that if Apple products were
more expensive they’d sell more?

The only instance I can see where this might be true is with the Gold Apple
watch (and that’s obviously not a purely software issue):

[http://uk.businessinsider.com/apple-watch-edition-sold-
out-i...](http://uk.businessinsider.com/apple-watch-edition-sold-out-in-
china-2015-4?op=1)

But in general I can’t really see this...

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cjlars
I don't have a theory fully worked out for this, but I'm half convinced that
rents in HCOL coastal cities fit into this framework. Sure, it's nice living
in San Francisco, but you can get the same or better weather in smaller
coastal towns, get more space and live better on a cost of living adjusted
basis in a whole lot of other places. But still people come to the big cities
and struggle to make it financially.

The good jobs and appreciating real estate, admittedly limit how well this
theory fits together, but a big HCOL city is prestigious and exotic in large
part because of, not despite, its price.

~~~
dpark
A HCOL city brings a bunch of things together that you can't get all together
elsewhere. Critically:

1\. Jobs 2\. People 3\. Events/activities

You can pay the San Francisco premium and have a massive job market, a million
people to befriend/date/learn from/etc, and thousands of activities and
experiences to engage in constantly. Or you can live in a small town with far
fewer job opportunities, far fewer people, and far less to do.

Small town life is not a bad choice if it's what you want. But if you want to
live in a lively city, you're going to pay for it, because a _lot_ of people
want that life and you're competing with them for a space to do it.

Now, if you're talking about Palo Alto, maybe.

~~~
cjlars
That explains the draw of SF vs Monterey, but not necessarily SF vs Houston.
Why do the most prestigious cities reliably stay the most prestigious cities,
if not for the prestige itself being the draw?

As I said, I'm grasping a bit because I'm not sure I fully grok it. But there
is something that would be lost about Manhattan if it became cheap. I believe
it's not just the three items you list, but also the concentration of people
that not only want to, but crucially, can afford the price of entrance.
Beverly Hills comes to mind as an example, why do the rich and famous want to
live there if not to also be surrounded by other rich and famous? Perhaps
that's closer to the common link you mention in Palo Alto.

~~~
dpark
Yes, clearly much of the appeal of Beverly Hills is the proximity to wealth. I
don't think that's nearly as applicable to San Francisco, given that the
proximity to wealth is countered by the proximity to homeless encampments.

I will concede that for some portion of people, the prestige of living in San
Francisco is a part of the draw. There are other factors that are probably
more important for a lot of people, though. Comparing to Houston, San
Francisco is literally 5 times as densely populated, which changes the feel of
the city drastically. Houston is larger in terms of population, but it's also
massively sprawled. That sprawl drives down the price of homes but also makes
much of the city feel like the suburbs (probably; I have not visited).

Houston also spends >100 days/year at >90F, which makes it not comparable to a
coastal city for people who do highly value temperate weather.

