As Mr. Giffen has pointed out, a rise in the price of bread makes so large a drain on the resources of the poorer labouring families and raises so much the marginal utility of money to them, that they are forced to curtail their consumption of meat and the more expensive farinaceous foods: and, bread being still the cheapest food which they can get and will take, they consume more, and not less of it.
The MR post quotes Bill Margold:
"As soon as we get a universal or national porn tax, we get what we've always wanted -- that comfort zone of respectability that cigarettes, alcohol and gambling have," said Bill Margold, a former porn performer who now advocates for adult performers.
But what we really have here is probably a Veblen good. A Veblen good is:
if people's preference for buying it increases as a direct function of its price.
The definition does not require that any Veblen goods actually exist. However, it is claimed that some types of high-status goods, such as expensive wines or perfumes are Veblen goods, in that decreasing their prices decreases people's preference for buying them because they are no longer perceived as exclusive or high status products. The Veblen effect is named after the economist Thorstein Veblen, who invented the concepts of conspicuous consumption and status-seeking.
Marginal Revolution has a more recent post on the Veblen effect in the case of paid sex here.
Keywords: Porn, Giffen Good, Veblen Good
2 comments:
I am a student of Veblen, in the formal sense (having graduated from an institutionalist department) and I have never heard of the term "Veblen Good." I think what they mean here is just the term that he coined -- "conspicuous consumption." Does this imply that the fact of paying for sex heightens the enjoyment of the good? That sounds about right. In the reverse, maybe, like housework, we don't place any value on goods that are free. Hence the warning all young girls get from their snarky aunts, "you won't get him to buy the cow if he gets the milk for free!"
Also, along the lines of Giffen goods. This is a fascinating discussion. There is a great article in the Journal of Economic Issues on the existence of Giffen goods (or lack thereof). Turns out that Sir Giffen, a native of the UK would have been 8 years old at the time of his supposed citing of the giffen good. Nowhere near the famine in Ireland.
You can learn about Giffen and the history of Giffen goods in Prof. Roger Mason's book: "Robert Giffen and the Giffen Paradox". Mr. Giffen worked for the government and wouldn't publish his findings. But he was friend of Marshall. So he probably talked to Marshall about it.
The question came about the marginal utility of money. Marshall said the marginal utility is constant, except for the very poor.
Leibenstein (1950) discovered the Veblen effect and namely in honour of Thorstein Veblen.
Post a Comment