Conspicuous Consumption

Thorstein Veblen coined the term conspicuous consumption around the turn of the 20th century. If you have ever wondered why someone drives a Cadillac when a Hyundai will get you where you want to go, then you understand the basic concept of conspicuous consumption. Any make of car may get you to your destination, but driving a Cadillac will get you noticed by others. Economists postulate that consumers derive “utility” from the consumption of goods. Veblen would say that this utility comes from two distinct characteristics of goods. The first is what he called the serviceability of the good. This basically means that the good gets the job done. Both the Cadillac and the Hyundai will get you from New York to Boston. The other ...