We are getting used to see some social media posts in which people mention they need products such as led lamps, agave syrup etc. Do they really need them or is it just because they are best-selling products? These items may seem trivial. On the other hand, I need an iPhone 12 pro max. It makes sense, right? Do not you also need a MacBook or a membership in some applications such as Netflix and Spotify? I would bet that neither we need an iPhone 12 pro max nor a MacBook. Trust me, our ancestors did not need these items. Well, we do not need them either. Then, why do we go insane and demand these stuffs too much? Let me explain 2 concepts which may be the reason of consumerism in 21st century.
As a social being, we tend to be affected by what others do and think. Bandwagon effect refers to the first one and Veblen effect refers to the latter.
There is a tendency to go with the flow even if your beliefs and preferences differ from others. This desire, which is called Bandwagon Effect, may be the reason behind some consumption decisions. Personally speaking, I spend a lot of time on social media, and I cannot stand seeing posts about popular diet culture and fashion trends (I might be responsible for some of them, but it is not that easy to change the algorithm of your account once you build it.). Even if it frustrates me, I usually find myself buying some sugar substitutes or the expensive sweatshirts that I do not even want to wear. The reason behind demanding best-selling products may be the same reason: Bandwagon Effect.
Generally, demand of a product decreases as its price increases. On the contrary it is not the case for Veblen goods. Veblen mentions that wealthy people tend to consume products with higher prices even if their functions are same as the cheaper ones. Expensive products may seem relevant to prestige and status. iPhone and MacBook may be appropriate examples. People from middle and high socioeconomic status mostly prefer iPhone even if they do not use most of the qualifications of it. A cheaper phone may meet our needs for listening to music, using social media apps etc. but it may not meet our need for prestige. That is why most of us prefer expensive cars, phones, clothes, and accessories.
Being aware of the real reasons of your consumption behavior may help you in some cases. You can save money by buying less Veblen goods or ignoring the best-selling product. On the other hand, prestige and conformity may be the concepts you value too much. In this case, buying Veblen goods and best-selling goods may be more beneficial for you even if it not so budget friendly.
- Ungvarsky, J. (2019). Bandwagon effect. Salem Press Encyclopedia.
- Laurie Simon Bagwell, & B. Douglas Bernheim. (1996). Veblen Effects in a Theory of Conspicuous Consumption. The American Economic Review, 86(3), 349–373.