Veblen Goods: Buying to Show Off

Conspicuous Consumption

Why do people buy a $500,000 watch that tells time worse than a$10 Casio? Because the point is not to tell time. The point is to tell people you have $500,000.

These are Veblen Goods. Their value comes from their high price. If the price dropped, people would stop buying them because they would no longer signal status.

The Status Game

We are social primates obsessed with hierarchy. Veblen goods act as costly signals of fitness. We waste resources to prove we have resources to waste. Ask yourself: Are you buying this because you like it, or because you want others to know you can afford it?