BROWSE

Veblen Good

Definition

Veblen goods are types of luxury goods for which the quantity demanded increases as the price increases, an apparent contradiction of the law of demand. Consumers actually prefer more of the good as its price rises, and the result is an upward sloping demand curve. For example, in the 1990s when "fashion" jeans became popular, one retailer found that he could sell more when he raised the price. Also functioning as positional goods, they include expensive wines, jewelry, fashion-designer handbags, and luxury cars which are in demand because of, rather than in spite of, the high prices asked for them. This makes them desirable as status symbols in the practices of conspicuous consumption and conspicuous leisure.

What is a 'Veblen Good'

A good for which demand increases as the price increases, because of its exclusive nature and appeal as a status symbol. A Veblen good, like a Giffen good, has an upward-sloping demand curve, which runs counter to the typical downward-sloping curve. However, a Veblen good is generally a high-quality, coveted product, in contrast to a Giffen good which is an inferior product that does not have easily available substitutes. As well, the increase in demand for a Veblen good reflects consumer tastes and preferences, unlike a Giffen good, where higher demand is directly attributable to the price increase. The term is named after the American economist Thorstein Veblen, who is best known for introducing the term “conspicuous consumption.”

Explaining 'Veblen Good'

Veblen goods are fairly commonplace, unlike Giffen goods which are elusive and quite difficult to identify. Very expensive products – such as designer jewelry, pricey watches, and luxury cars – that are marketed as being “exclusive,” or which convey the appearance of success, can be classified as Veblen goods. Veblen goods are generally targeted at affluent individuals, have a very strong brand identity that is synonymous with luxury and are far more likely to be sold in upscale boutiques than in common department stores.


Further Reading


Well‐being and affluence in the presence of a Veblen Good
academic.oup.com [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

Veblen's theory of finance capitalism and contemporary corporate AmericaVeblen's theory of finance capitalism and contemporary corporate America
www.tandfonline.com [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

Sabotage in the financial system: Lessons from VeblenSabotage in the financial system: Lessons from Veblen
www.sciencedirect.com [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

Uncertainty and the institutional structure of capitalist economies: Remarks upon receiving the Veblen-Commons awardUncertainty and the institutional structure of capitalist economies: Remarks upon receiving the Veblen-Commons award
www.tandfonline.com [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

John Hobson, Thorstein Veblen and the phenomenon of imperialism: finance capital, patriotism and warJohn Hobson, Thorstein Veblen and the phenomenon of imperialism: finance capital, patriotism and war
onlinelibrary.wiley.com [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

T. Veblen's evolutionary theory of entrepreneurshipT. Veblen's evolutionary theory of entrepreneurship
www.jstor.org [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

Emulation, inequality, and work hours: Was Thorsten Veblen right?Emulation, inequality, and work hours: Was Thorsten Veblen right?
academic.oup.com [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

Civilizing capitalism:“good” and “bad” greed from the enlightenment to Thorstein Veblen (1857-1929)Civilizing capitalism:“good” and “bad” greed from the enlightenment to Thorstein Veblen (1857-1929)
mpra.ub.uni-muenchen.de [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …

Thorstein Veblen on credit and economic crisesThorstein Veblen on credit and economic crises
academic.oup.com [PDF]
… Well‐being and Affluence in the Presence of a Veblen Good … at the University of British Columbia and of the Bank of Montreal Lecture Series on Economics and Evolution … Author Notes. The Economic Journal, Volume 119, Issue 539, 1 July 2009, Pages 1088–1104, https://doi.org …



Q&A About Veblen Good


What is a Veblen good?

A Veblen good is a good for which demand increases as the price increases, because of its exclusive nature and appeal as a status symbol.

Where do you find these products?

These products are generally targeted at affluent individuals and tend to be sold in upscale boutiques rather than common department stores.

What does it mean to be an exclusive product?

It means that the product is not easily available or has limited availability.

How are Veblen goods different from Giffen goods?

The increase in demand for a Veblen good reflects consumer tastes and preferences whereas with Giffen goods, higher demand is directly attributable to the price increase.

Are there any examples of Veblen goods?

Designer jewelry, pricey watches, luxury cars can all be classified as Veblen goods.

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