Ruth Tarrant Head of Economics and Politics, Bedales School

October 2013

What would Thorstein Veblen say?
The hyped-up b...
Ruth Tarrant Head of Economics and Politics, Bedales School

an iCandy pram for baby Harper causing sales of the
pram to r...
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econoMAX - What would Thorstein Veblen say?

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The hyped-up birth of the new Royal baby, Prince George, has brought the fashionista mums and mums-to-be out in force as they try to emulate the clothes and accessories
accompanying the nation’s favourite baby and his trend-setting mother. According to a recent study by babycentre.com UK’s branch, just under half of all new mothers said they had bought more luxury items for their babies than themselves, and that on average, one third of parents had already spent over £6000 on their little bundles before they were 6 months old.

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econoMAX - What would Thorstein Veblen say?

  1. 1. Ruth Tarrant Head of Economics and Politics, Bedales School October 2013 What would Thorstein Veblen say? The hyped-up birth of the new Royal baby, Prince George, has brought the fashionista mums and mums-to-be out in force as they try to emulate the clothes and accessories accompanying the nation’s favourite baby and his trend-setting mother. According to a recent study by babycentre.com UK’s branch, just under half of all new mothers said they had bought more luxury items for their babies than themselves, and that on average, one third of parents had already spent over £6000 on their little bundles before they were 6 months old. Thorstein Veblen (1857 – 1949) is the economist credited with the concept of conspicuous consumption – this is the spending of money on luxury goods to publicly display a high social and economic status. At the ‘top end’ of the conspicuous consumption scale, goods are bought with the intention of provoking envy amongst others, so-called invidious consumption. Veblen’s work has been developed more recently by the new breed of behavioural economists, such as Dan Ariely. Veblen is most well known to students of A-level economics as being the economist responsible for the term Veblen good, which is a good for which demand increases when its price increases. This contradicts the usual view of demand, where quantity demanded is inversely related to price. Looking more closely at the baby items bought for Prince George, he has a Blue Almonds moses basket for £295 and a Bugaboo pushchair for just under £1000. Stella McCartney sells baby bomber jackets for £60, potties can be found on Amazon for £35, and Harper Beckham had £2000 worth of shoes before she turned 1 (including a pair of £112 Hermes lambskin booties). Victoria Beckham chose
  2. 2. Ruth Tarrant Head of Economics and Politics, Bedales School an iCandy pram for baby Harper causing sales of the pram to rocket from £3.6m in 2009 to £9.6m in just a few months after her birth. Despite a significant slowdown in the UK economy over recent years, the luxury baby market has grown rapidly, from sales of £6.3bn in 2010 to over £7bn by early 2014. This suggests that such items might actually be inferior goods, which might seem a little bizarre, until we consider Veblen’s original work on conspicuous consumption in The Theory of the Leisure Class (1899): In modern civilized communities... the members of each stratum accept as their ideal of decency the scheme of life in vogue in the next higher stratum. It frequently happens that an element of the standard of living which set out with being primarily wasteful, ends with becoming, in the apprehension of the consumer, a necessary of life And Conspicuous consumption of valuable goods is a means of reputability Veblen was, on the whole, rather scathing of conspicuous consumption and chose to live his life in a rather disheveled, grubby state. However, with the boost to retail spending as a result of Prince George’s arrival estimated at £243m, with a multiplier effect to add in, perhaps we shouldn’t be too scornful of those mums who absolutely have to have the Blue Almond moses basket, or at least the £35 version from Asda. Sources www.bbc.co.uk/news/business-23182280 www.retailresearch.org/royalbaby2013.php

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