The Veblen effect, or Why we make irrational purchases

Each of us probably came across small shops with an eye-catching sign of a well-known brand and truly "cosmic" prices. In spite of the fact that goods of this quality can be safely purchased at a more reasonable cost, there are people who prefer to overpay for useful properties of products sold in such outlets. Moreover, the desire to get a little thing into your wardrobe at a prohibitive price is sometimes so strong that people spend precious time waiting in long lines - how to explain this behavior?

Veblen effect: concept and essence

In economic theory, it is customary to divide the solvent demand for goods into two large categories: functional demand and nonfunctional. And if the first group is directly conditioned by the consumer qualities of the product or service, then the second depends on factors whose relationship with useful properties can be difficult to follow. Some people buy what their acquaintances prefer to gain (the effect of joining the majority), others tend to stand out from the crowd (the effect of a snob), while others want to raise their prestige and demonstratively buy expensive things. The latter case was described in detail by economist T. Veblen, in honor of which the use of goods or services not for their intended purpose, but in order to create an indelible impression, and received the so-called "Veblen effect".

This American futurist and publicist wrote a number of books, such as "Theory of Entrepreneurship", "Theory of an Idle Class", etc., thanks to which the concept of "prestigious and ostentatious consumption" has become firmly established in sociology and economists. According to Veblen, in modern society, demand is greatly influenced by the way "the cream of society". The lifestyle of an idle class is increasingly becoming the norm and standard for all other people. Therefore, many try to copy the tastes and preferences of oligarchs, "golden youth", show business stars, etc. Well, marketers are very good at it.

The Veblen effect: examples from life

Status consumption can be observed at almost every step. It is enough to see how our deputies dress and how they ride. You can also go to one of the fashion boutiques and take an interest in prices for the sake of interest. The effect of Veblen often manifests itself in the evaluation of works of art, it operates in expensive restaurants and hotels, often manifested in advertising on the pages of expensive magazines. And if you add that the Russian soul has a tendency to go to extremes, it becomes clear why some people think that perfumes should necessarily be from Armani, clothes from Brioni, and watches from the collection of Patek Philippe. The latter, by the way, are very popular among the Russian elite - among the fans of this brand are V. Putin, A. Chubais, S. Naryshkin, etc.

Features of domestic status consumption

The Veblen paradox is known for a long time, and there are no such countries that could be written into an exception. However, the way he works in the countries of the former Soviet Union differs significantly from his manifestation in Europe. If rich residents of highly developed countries give their preference to unique exclusive goods or a brand with a history of several hundred years, the main indicator for our compatriots is nothing more than a high price. The higher the value of the goods, the more valuable and desirable for them. This should be borne in mind, if suddenly there was a desire to please yourself with some "brand" thing. Our marketers are a cunning people, in their actions they do not disdain to use all sorts of psychological techniques. Knowing what exactly motivates us to purchase these or those things, we will be able to make our choice more competently and not to allow extra spending of our budget.