Snob effect
Encyclopedia
The snob effect is a phenomenon often observed in the field of microeconomics
that refers to the situation where the demand for a certain good for individuals of a higher income level is inversely related to the demand for the good by individuals of a lower income level. The "snob effect" contrasts most other microeconomic models, in that the demand curve can have a positive slope, rather than the typical negatively sloped demand curve of normal goods.
This situation is derived by the desire to own unusual, expensive or unique goods. These goods usually have a high economic value, but low practical value. The less of an item available, the higher its snob value. Examples of such items with general snob value are rare works of art, designer clothing
, and sports cars.
In all these cases, one can debate whether they meet the snob value criterion, which in itself may vary from person to person. A person may reasonably claim to purchase a designer garment because of a certain threading technique, longevity, and fabric. While this is true in some cases, the desired effect can often be achieved by purchasing a less-expensive version from a reputable brand. Often these high-end items end up as closeout items in discount stores or online retailers where they may be offered at deep discounts from original price, bringing into question the true value of the product. Ultimately, wealthy consumers can be lured by superficial factors such as rarity, celebrity representation and brand prestige.
Collectors within a specific field can suffer from snob effect, searching for the rarest and often most expensive collectibles. Such examples are classic automobiles, stamps
and coins
.
and the Bandwagon effect
Microeconomics
Microeconomics is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources. Typically, it applies to markets where goods or services are being bought and sold...
that refers to the situation where the demand for a certain good for individuals of a higher income level is inversely related to the demand for the good by individuals of a lower income level. The "snob effect" contrasts most other microeconomic models, in that the demand curve can have a positive slope, rather than the typical negatively sloped demand curve of normal goods.
This situation is derived by the desire to own unusual, expensive or unique goods. These goods usually have a high economic value, but low practical value. The less of an item available, the higher its snob value. Examples of such items with general snob value are rare works of art, designer clothing
Designer clothing
Designer clothing is clothing that bears the logo of a recognizable fashion designer.The 'designer' whose name is on the label may be:* A European couturier, e.g. Chanel, Christian Dior* A European luxury goods house, e.g. Armani, Gucci, Louis Vuitton...
, and sports cars.
In all these cases, one can debate whether they meet the snob value criterion, which in itself may vary from person to person. A person may reasonably claim to purchase a designer garment because of a certain threading technique, longevity, and fabric. While this is true in some cases, the desired effect can often be achieved by purchasing a less-expensive version from a reputable brand. Often these high-end items end up as closeout items in discount stores or online retailers where they may be offered at deep discounts from original price, bringing into question the true value of the product. Ultimately, wealthy consumers can be lured by superficial factors such as rarity, celebrity representation and brand prestige.
Collectors within a specific field can suffer from snob effect, searching for the rarest and often most expensive collectibles. Such examples are classic automobiles, stamps
Penny Black
The Penny Black was the world's first adhesive postage stamp used in a public postal system. It was issued in Britain on 1 May 1840, for official use from 6 May of that year....
and coins
1933 Double Eagle
The 1933 double eagle currently holds the record for the highest price paid at auction for a single U.S. coin when it was purchased for US$7.59 million...
.
Related Concepts
Relevant to the snob effect are two other microeconomic concepts, Veblen goodsVeblen goods
In economics, Veblen goods are a group of commodities for which people's preference for buying them increases as their price increases, as greater price confers greater status, instead of decreasing according to the law of demand. A Veblen good is often also a positional good...
and the Bandwagon effect
Bandwagon effect
The bandwagon effect is a well documented form of groupthink in behavioral science and has many applications. The general rule is that conduct or beliefs spread among people, as fads and trends clearly do, with "the probability of any individual adopting it increasing with the proportion who have...