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How Apple’s pricey new iPhone X tests economic theory • WSJ
Josh Zumbrum and Tripp Mickle:
<p>Apple and Samsung have found themselves here partly by necessity. Smartphone makers are running out of new customers. Data from IHS Markit estimates there are just under 100 smartphones per 100 people in the U.S. and about 92 smartphones per 100 people in Europe. (Many people own more than one phone.) By 2020, there will be about 84 smartphones per 100 people globally, IHS projects.

To generate more revenue the big smartphone makers increasingly need to push on price.

“They can create a super-premium model and perception of super-premium that pushes those buyer types into the stratosphere,” said Steven Haines, chief executive of Sequent Learning Networks, which advises companies on product management. “This is classic product management.”

Such segmentation is normal in mature industries, said Mr. Haines, comparing smartphones to what happened with the auto industry, where luxury cars with high prices became a status symbol as car ownership became commonplace.</p>

Zumbrum and Mickle are trying to argue that the iPhone [X] is a Veblen good - where demand rises as the price goes up. Neil Cybart takes this argument to pieces in his latest newsletter (sign up on <a href=""></a>). He points out that iPhone starting prices now range from $349 (iPhone SE) to $999 (iPhone X):
<p>Apple didn't establish the preceding price range in order to push specific "luxury" models, like iPhone X or iPhone 8 Plus. It's not that the higher-end models are priced in such a way as to stoke demand and interest simply because of a higher price. Instead, iPhone pricing is based on capability [such as camera, processor speed, screen size].</p>

Handbags or Vertu phones (which recently went bust) aren't priced on their capability. Vertu phones were arguably less capable than far cheaper devices.
economics  veblen  iphone 
september 2017 by charlesarthur
Courtship gifts The waning power of the engagement ring
Now, that promise is dimming (see article). Though a growing Chinese middle class will probably prop up demand for a while, millennials in Western countries seem keener on memorable experiences than on bling. Diamonds’ image has been blemished by some being mined in warzones and sold to pay for the fighting. Meanwhile, laboratory-grown “synthetic” diamonds, long fit only for industrial use, are becoming good enough to compete with gems from out of the ground.
But the long-term threat to diamonds’ lustre is more surprising: that their price could plummet. In recent years regulators (and market forces) have undermined De Beers’s cartel by limiting the share of other producers’ stones that it can buy. Now responsible for just a third of global sales, the company can no longer manage supply by stockpiling gems when demand turns down. It is spending less on advertising, since it no longer gets the lion’s share of the benefits. But the very value of diamonds lies in being scarce and coveted—that is, costly. In the jargon, they are “Veblen goods”, named after a 19th-century economist: prestige-enhancing trinkets for which a higher price encourages buyers. With most products, lower prices increase demand; with diamonds, they could kill it.
veblen  economics  diamonds  from twitter_favs
february 2017 by atbradley
Activewear Everywhere: The Sociology of Conspicuous AthLeisure
While Thorstein Veblen (1965) was not a symbolic interactionist, his classic text, The Theory of the Leisure Class, examined how people demonstrated their social power through consumption. Social power can be thought of as the ability to get what you want from others, even if they do not want to give it to you. The higher an individual is within a social hierarchy, the more social power they tend to have. Veblen identified three ways that people communicated their social power: conspicuous consumption, conspicuous leisure, and conspicuous waste.

To be conspicuous is to stand apart from a group in a clearly visible way. Veblen thought that socially powerful people were using their consumption, leisure, and waste to communicate how much time they could spend being unproductive (i.e. not at work making money). An example of conspicuous consumption could be driving a fancy car, living in a giant mansion, or owning white clothes (because who could afford to wear something so easily stained other than someone with the money to replace it). Conspicuous leisure occurs when we post photos of our vacations on social media or bring back trinkets with the name of the place we visited clearly written on them. Conspicuous waste could include things like throwing away perfectly usable goods, or needlessly replacing things (e.g. buying this year’s iPhone, even though your current one works fine).

Veblen argued that socially powerful people in a modern capitalist society used their consumption of goods and leisure and the waste created by both as a socially appropriate way to communicate one’s class location. For instance, it’s rude to say, "I am a very rich person who makes far more money than most people. However, it’s socially appropriate to drive an expensive car, wear designer clothes, live in a mansion, and take vacations to exotic locations. In the modern U.S., we let our things and our experiences tell all those around us who we are and how socially powerful we are.
Conspicuous AthLeisure

Taken together, we can view At
athleisure  consumption  conspicuous  consumption  Thorstein  Veblen  Leisure  Class 
may 2016 by thegrandnarrative
iA study in Total Depravity, by Siva Vaidhayanathan
the Johns Hopkins University Press has just published an annotated edition of Veblen’s long out-of-print 1918 classic, The Higher Learning in America, which Veblen composed after seeing the universities he loved transform themselves rather quickly, in the first decades of the twentieth century, into huge machines devoted to serving the business community’s short-term demands. Intellectual historian Richard Teichgraeber of Tulane University offers a solid and lucid introduction to the edition, ... Even more valuable, Teichgraeber has provided rich footnotes to the text that refer us to other writings by Veblen and that define some of the old sociological satirist’s odder and more dated phrases.
Veblen  book  review  higher  education  learning  institutions  via:3quarksdaily 
october 2015 by suitable
Erin Wais - Trained Incapacity: Thorstein Veblen and Kenneth Burke | KB Journal (2006)
Erin Wais, University of Minnesota -- Abstract: Recently, a leading sociologist claimed that the phrase “trained incapacity” does not appear in the works of Thorstein Veblen. Kenneth Burke, who attributed the phrase to Veblen in Permanence and Change, was later unsure of its origins. This essay shows that, indeed, Veblen did coin the term, using it particularly in reference to problematic tendencies in business. Burke, on the other hand, gave the term an expansive application to human symbol-using generally. -- see very interesting discussion of "screens" in Darwin and neo-Darwinism evolutionary_biology downloaded as pdf to Note
article  social_theory  economic_sociology  economic_culture  epistemology-social  Veblen  Burke_Kenneth  epistemic_closure  change-social  symbolic_interaction  evolutionary_biology  downloaded 
may 2015 by dunnettreader
Beauty, and What It Means: Beauty and (In)conspicuous Consumption
This last essay brought up inconspicuous consumption—an inversion of Thorstein Veblen's theory of conspicuous consumption that shows how the truly wealthy will invest in less-visible goods (such as travel and education) and that it's actually people with less net worth who spend more on visible goods like expensive cars, jewelry, and clothing. It made me wonder about the money people spend on beauty, and whether beauty goods are examples of inconspicuous consumption, or examples of the opposite. After all, our faces and bodies are the most visible things we own—but most run-of-the-mill beauty products are meant to be inconspicuous, and few advertise themselves as markers of wealth once on the wearer. Sure, a Chanel lipstick says its owner is able to spend $35 on a tube of wax, but freshly applied it's not going to look much different than the $7 tube from the drugstore. The more I think about it, the more I wonder whether beauty work is coded similarly to other forms of inconspicuous
cosmetic  surgery  plastic  surgery  class  wealth  beauty  Thorstein  Veblen 
october 2014 by thegrandnarrative
Nitzan, Jonathan - From Olson to Veblen: The Stagflationary Rise of Distributional Coalitions (1992) | bnarchives
Paper read at the annual meeting of the History of Economics Society. Fairfax, Virginia. 1-2 June (1992). pp. 1-75. -- This essay deals with the relationship between stagflation and the process of restructuring. The literature dealing with the interaction of stagnation and inflation is invariably based on some explicit or implicit assumptions about economic structure, but there are very few writings which concentrate specifically on the link between the macroeconomic phenomenon of stagflation and the process of structural change. Of the few who dealt with this issue, we have chosen to focus mainly on two important contributors – Mancur Olson and Thorstein Veblen. The first based his theory on neoclassical principles, attempting to demonstrate their universality across time and place. The second was influenced by the historical school and concentrated specifically on the institutional features of modern capitalism. Despite the fundamental differences in their respective frameworks, both writers arrive at a similar conclusion, namely, that the phenomenon of stagflation is inherent in the dynamic evolution of collective economic action, particularly in the rise and consolidation of 'distributional coalitions.' -- Keywords: absentee ownership, intangible assets, big business, bonds, capital, accumulation, capitalism, collective action, collusion, corporation, credit, degree of monopoly, distributional coalitions, excess capacity, finance, immaterial wealth, income distribution, industry, inflation, institutions, interest, labour, liabilities, machine process, material wealth, neoclassical economics, normal rate of return, power, price, profit, productivity, property, sabotage, scarcity, stagnation, stagflation, stocks, tangible assets, technology, United States, value
paper  US_economy  economic_history  economic_theory  institutional_economics  Veblen  political_economy  Olson_Mancur  public_choice  collective_action  capital  capitalism  power  power-asymmetric  business-and-politics  interest_groups  interest_rates  interest_rate-natural  profit  corporate_ownership  managerialism  industry  production  productivity  productivity-labor_share  sabotage-by_business  distribution-income  distribution-wealth  wealth  asset_prices  financial_system  credit  competition  monopolies  oligopoly  prices  inflation  stagnation  property  technology  capital_markets  antitrust  neoclassical_economics  change-economic  change-social  levels_of_analyis  mesolevel  microfoundations  downloaded  EF-add 
october 2014 by dunnettreader
William M. Dugger and William Waller - Radical Institutionalism: From Technological to Democratic Instrumentalism | JSTOR: Review of Social Economy, Vol. 54, No. 2 (SUMMER 1996), pp. 169-189
This article explains the nature and significance of radical institutionalism. Radical institutionalism does not represent a break with the institutionalist paradigm, but an attempt to move it beyond its outmoded, Ayresian philosophical foundation. Radical institutionalism involves the introduction of three new elements into the contemporary stream of institutionalist works. These three new elements include an emphasis on Veblenian fundamentals, a shift in research interests, and a reconsideration of the philosophical foundations of inquiry. -- useful bibliography of generations of institutionalist theorists -- downloaded pdf to Note
article  jstor  social_theory  intellectual_history  economic_theory  economic_history  institutional_economics  epistemology-social  sociology_of_knowledge  capitalism  corporations  welfare_state  democracy  Veblen  class_conflict  financialization  ruling_class  postmodern  Post-Keynesian  epistemology  critical_realism  bibliography  downloaded  EF-add 
october 2014 by dunnettreader
Michael Hudson - Veblen’s Institutionalist Elaboration of Rent Theory - Working Paper No. 729 | Levy Economics Institute - August 2012
As the heirs to classical political economy and the German historical school, the American institutionalists retained rent theory and its corollary idea of unearned income. More than any other institutionalist, Thorstein Veblen emphasized the dynamics of banks financing real estate speculation and Wall Street maneuvering to organize monopolies and trusts. Yet despite the popularity of his writings with the reading public, his contribution has remained isolated from the academic mainstream, and he did not leave behind a “school.” Veblen criticized academic economists for having fallen subject to “trained incapacity” as a result of being turned into factotums to defend rentier interests. Business schools were painting an unrealistic happy-face picture of the economy, teaching financial techniques but leaving out of account the need to reform the economy’s practices and institutions. In emphasizing how financial “predation” was hijacking the economy’s technological potential, Veblen’s vision was as materialist and culturally broad as that of the Marxists, and as dismissive of the status quo. Technological innovation was reducing costs but breeding monopolies as the finance, insurance, and real estate (FIRE) sectors joined forces to create a financial symbiosis cemented by political-insider dealings—and a trivialization of economic theory as it seeks to avoid dealing with society’s failure to achieve its technological potential. The fruits of rising productivity were used to finance robber barons who had no better use of their wealth than to reduce great artworks to the status of ownership trophies and achieve leisure-class status by funding business schools and colleges to promote a self-congratulatory but deceptive portrayal of their wealth-grabbing behavior. -- Associated Program: Explorations in Theory and Empirical Analysis -- downloaded pdf to Note
paper  intellectual_history  19thC  20thC  Veblen  entre_deux_guerres  economic_history  economic_theory  institutional_economics  political_economy  classical_economics  neoclassical_economics  marginalists  German_historical_school  professionalization  academia  philanthropy  Gilded_Age  robber_barons  finance_capital  technology  investment  monopolies  speculative_finance  financial_system  financialization  antitrust  history-and-social_sciences  rentiers  rent-seeking  business-and-politics  business-norms  busisness-ethics  business_schools  downloaded  EF-add 
october 2014 by dunnettreader
The Show-Off Society -
Has there been an explosion of elite ostentation? If so, does it reflect moral decline, or a change in circumstances?
conspicuous  consumption  ostentatious  class  politics  conspicuousconsumption  economics  veblen  history 
september 2014 by timcowlishaw

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