NC State Ag Economist Dr. Mike Walden – “Veblen Goods”

 

Mary:    I’m Mary Walden with economist MW welcoming you to the economic perspective.  Today’s program looks at Veblen goods.  Mike, there is a well-used concept in economics that says people buy more of something when its price falls, and they buy less when the price rises.  But is this an ironclad idea?  Are there any exceptions?

Mike:  Summary Answer

  1. One exception is for products economists call Veblen goods – named after the economist who discovered them
  2. A Veblen good is one where purchases rise when the product’s price rises
  3. This is because such goods are considered status symbols – and people want the status of using the products
  4. In this case, if product’s price rises, it is considered even more exclusive and even more people will want to have it
  5. Buzz that the next iphone, about which there are rumors of a price over $1000 – would be in this category
  6. Danger for producer, of course, is status can be a temporary condition
  7. I’m MW

Mary:  And I’m Mary Walden for N C State Extension

 


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