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"Frank's model also suggests that the observability of consumption (or production) is crucial."

This is epidemic in MBA programs. I've known a number of students that live in TINY apartments but all have brand new BMWs. I once asked a student of mine why that was, and he said "because EVERYONE sees your car. Only your close friends know where you live" (while looking at me like I was stupid). He went on to say that this was very common in the city in China where he was from - that you'd have 4 guys living in a tiny apartment, but they'd all have less than 2 year old luxury cars.

At the time I was living in a nice house but driving a beat up 6-year old Hyundai Sonata, so I guess I missed the memo.

But for *real* status, driving a 1994 MX6 beats the lot! It shows I know how to fix it (well, most of the time).

That would provide a lot more status. My car was a combination of cheap, bland and beat up (because I hit a deer with it).

Nick - yup, fixing your own car is definitely conspicuous production.

But surely keeping a Lada on the road would be a better signal of ability?

And isn't there a bit of a SuperDad (masculine equivalent of SuperMom) thing going on here as well? That is, if you were teenage grease-monkey, would fixing up your own car be such a status signal?

But being a respected intellectual *and* being able to fix your own car - that's SuperDad.

When I was in Grade 4, I also envied my classmate's steady lunchtime diet of, in this case, Hostess Cup Cakes (despite the fact that my father never tired of describing them as "road tar and shaving cream"). However, I learned my first lesson in economics when I discovered that I could trade my mother's homemade peanut butter cookies at an exchange rate of 1 cookie/2 cupcakes. Ever since, I've been skeptical about the omnipotence of corporate marketing.

This reminds me of a good discussion of posititonal goods in the book The Rebel Sell by Andrew Potter and Joseph Heath, that was the first time I came across teh term position goods.

I'm enjoying your posts Frances! Keep them coming.

Nick, maybe this is a gender thing - but why does "driving a 1994 MX6" signal that you know how to maintain it? Couldn't you just have a good mechanic?
Fran, this post kept me puzzling all through yoga class, and I suspect will for a bit longer. The China example, though, may have helped: i was wondering about house cleaning. If you host a party, are guests more likely to be impressed by the homemade food or the clean and tidy house? Both are presumably time intensive.

Linda: The only reason *anybody* would drive a 1994 MX6 is that they actually *like* maintaining it. Unless, that is, they get pleasure from pouring money down the tubes.

Are schools still having kids build dioramas?

Linda - "are guests more likely to be impressed by the homemade food or the clean and tidy house"

If conspicuous production is signaling ability (like a BMW signals that you are skilled enough to earn enough to afford one), then whichever requires the most skill, I would think.

So mere cleanliness, probably no, but tasteful decor, yes.

Jon, this was about 10 years ago. But the shame still burns.

Halfkiwi - thanks for the kind words.

Linda: Yes, as K says, it's a signalling equilibrium. If I wanted to signal merely that I had money, I would buy a BMW. Or, light my roll-ups with $20 bills. But yes, it is a gender thing too. My repeated attempts to get either of my daughters interested in auto maintenance have failed miserably. And it's getting harder and harder for guys to find a "guy" car. The "chick car" label nearly killed the new Mini, plus the Mazda MX5.

Halfkiwi: I was thinking of Rebel Sell too. And that maybe the ultimate status signal is to buy no positional goods whatsoever. Just to signal that your status is so high, you don't need to signal it.

Linda, I'm thinking that perhaps my reply to your comment on cleanliness v. baking was biased by the fact that I enjoy baking way more than cleaning. But a clean house signals all sorts of things - organization, order, thoroughness...

Nice post. Signalling is one part, intrinsic enjoyment of mastery another, but a third is social license - some things are produced and consumed as badges of membership. Farmers in 18th century Poland who wore swords were members of the szlachta (the gentry), even though the sword was the sole sign of this. Clothes do a lot of this. Production can be involved as well as consumption - skilled craftspeople resent others doing what they are socially licensed to do. Arjun Appadurai (Social Life of Things) explores this.

Peter T: "skilled craftspeople resent others doing what they are socially licensed to do"

Interesting point. And it's not just skilled craftspeople. A relative who lived in Egypt for a while had a long-term dispute with his driver over who would push the shopping cart and load the groceries into the car - the driver resented my relative's insistence on doing things himself (eventually the driver won the battle). I'd thought of a sort of "taking a job away from the honest working man" kind of thing, but perhaps there's more to it than I'd thought.

I think this gets at the ways in which people use household production to construct who they are - e.g. female politicians touting their cooking abilities, from Golda Meir's chicken soup to Sarah Palin's moose chili (can't think of any male politicians who demonstrate their ability to fix a car however).

Frances: It's not fixing a car, but Reagan and Bush's brush clearing helped create the image of independent, rural, tough American man.

For evidence, look no further than the right-wing juxtaposition of Reagan/Bush and Obama's household production.

The brush clearing may have been chosen mostly to create an electable candidate rather than a personal identity. Still, the pursuit of a certain self-image might help explain the do-it-yourself mentality even when it’s cheaper and easier to hire a landscaper and lease a Honda.

Fraser, interesting. I was wondering if this kind of identity-building bush-clearing conspicuous production is different from conspicuous consumption. And then I thought about my recent trip to the electronics store to buy a new laptop (my old and beloved ibook is dying).

I was planning to buy something that ran Windows. A $700 Gateway would do everything that I need a computer to do. I had it in my hands. I was going to buy it. But I just couldn't bring myself to do it. It was so ugly. And clunky. And generic. And heavy.

Yes, I will go work to wearing jeans, carrying a scruffy backpack one of my kids has rejected. Sometimes I shop at Value Village. But to be seen in public with a cheap laptop? The shame would be unbearable. *It's just not me.*

Couldn't do it. Now the Macbook Air - that's a pretty machine.

So, on consideration, I think conspicuous production and conspicuous consumption are, in this way, much the same kind of thing.

Interesting piece, and useful to reverse the usual terminology from conspicuous consumption to production; that said, I think probably easier and more useful to model/consider as consumption of time and consumption of certain types of goods not readily available commercially.

Two thoughts about conspicuous consumption:
1) Always useful to emphasize and underline that the point of conspicuous consumption is mostly about signalling. The literature as noted generally assumes that the signalling is evolutionary in nature, i.e. about sexual selection. But I work abroad, and like the Chinese (?) MBA student, in my industry consumption is very much about signalling to peers/management/competitors/potential employers one's 'fitness.' Anecdotally, I was advised by a friend to spend this year's bonus on a fancy car to impress my manager; I still think this is stupid, because a) the bonus was not that big, so I would net-net be behind, and b) I walk to work so it would be pretty ineffective as a signal - but I have no choice but to register his point.
2) The part that I truly do not understand is the cultural component of this, and whether there are multiple equilibria that arise as a result. In my grandparents' generation/culture (southwestern ontario farming), conspicuous giving to e.g. local church and poor was a significant factor (and I still hear neighbourhood stories about this). It seems to me that the expensive car norm is not - but I don't know.

I need a better framework to understand what selects the signalling component, and the effects.

And what happens if the fashion is conspicuous investment?

As a side note, my suspicion is that there are a) pretty strong links between some forms of conspicuous consumption and bubbles (if the consumption is targetted at fixed assets), and b) a very strong investment/savings case to be made for contrarian strategies if you can figure out where conspicuous consumption/production/investment is likely to be counterproductive in the long term.

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