Even if you have never taken a single Economics class, chances are that you're familiar with some of the basic principles. Specifically, the law of demand is something you probably know well and have seen in action. This law states that demand for an item will fall as its price goes up and will rise as its price goes down. A good recent example of this law is CD players, which went from $700 luxury goods that only the very rich owned in the 1980s, to a very cheap good that can be found in most people's homes (unless they've already gone completely digital).
However, even though the law of demand makes both financial and logical sense, there is one type of good that seems to violate the law -- status symbol goods. Items with high perceived status will continue to have high demand despite (and sometimes because of) increased price. In fact, one type of status symbol goods -- known as Veblen goods -- are more in demand when their price rises and see decreased demand with a lower price.
That's because consumers of status symbol goods see the high price tag as an indication of prestige. For instance, Birkin bags (which I maintain have a spelling error) are in high demand among celebrities partially because they are so very expensive. Owning such a bag signals that you are wealthy -- and it puts you in an exclusive club of other Birkin bag owners.
In a world of $30,000 handbags and $150,000 automobiles, it's hardly surprising to learn that status-seeking individuals choose to buy goods and services based on how impressive the cost is. What is disconcerting is to realize that it's not just that typical high-prestige goods like handbags, luxury cars and the like that can become markers of status. As it turns out, status symbols can be counterproductive, exhausting, and downright weird. Here are three items you might never expect to confer status:
1. Lexus Lanes
If you live in an urban area with extreme traffic congestion, you may already be familiar with dynamic tolling -- also known as Lexus lanes. This traffic mitigation program is supposed to help improve traffic flow by increasing the price of admission to express lanes during peak commuting times. If the cost of admission to an express lane is set at the maximum (in Miami it's currently $7), then theoretically fewer drivers will choose to pay for the privilege of driving in that lane, ensuring the express aspect of the express lane.
Of course, human behavior is not necessarily that simple. According to Kenny Malone of NPR's Marketplace, "engineers found that, up to a point, drivers are actually drawn to higher tolls."
As it turns out, being able to afford an exorbitant toll for an express lane confers a certain level of status. At that point, a status-seeking driver might decide to shell out the extra money for the express lane in order to show that their time is worth more than the money.
Unfortunately for status-seeking drivers in the (aptly-nicknamed) Lexus lanes, express lanes are not necessarily better as the price goes up. According to Malone, "Dynamic tolling changes to ensure free-flowing traffic in the express lanes -- it has nothing to do with what's going on in the not-so-express lanes."
2. Being Busy
Of late, there have been a slew of articles discussing the role of busyness in modern life. It seems as though every social interaction among a certain demographic of Americans is a humble-bragging session about just how busy we each are.
Ann Burnett, Professor of Political Communication, explains that busyness somehow "became a mark of social status. People are competing about being busy. It's about showing status. That if you're busy, you're important."
Being busy, of course, has no financial cost. But it still has huge costs to the individual who buys into it for status reasons: unrelieved stress. Such stress can take a toll on your body, your relationships, and your overall quality of life.
To be clear, those who are genuinely busy because of situations outside of their control are not putting themselves through that stress for status reasons. But the type of complaint about being busy that is status-seeking is a costly and self-fulfilling status symbol.
Hanna Rosin of Slate reports that sociologist John Robinson, who is a pioneer in the study of time use diaries, has the antidote to status symbol busyness:
"The answer to feeling oppressively busy...is to stop telling yourself that you're oppressively busy, because the truth is that we are all much less busy than we think we are. And our consistent insistence that we are busy has created a host of personal and social ills--unnecessary stress, exhaustion, bad decision-making, and, on a bigger level, a conviction that the ideal worker is one who is available at all times because he or she is grateful to be 'busy.'"
3. Baby Names
Naming your child is an important job. Not only will your child's name be with her throughout her life, but the name you choose can end up signifying everything from religion to family tradition to social status.
The authors of the watershed book Freakonomics, Steven D. Levitt and Stephen J. Dubner, did some very interesting studies of baby names and their significance. In particular, one pattern that they found was unmistakable: "Once a name catches on among high-income, highly educated parents, it starts working its way down the socioeconomic ladder. Amber, Heather, and Stephanie started out as high-end names. For every high-end baby given those names, however, another five lower-income girls received those names within 10 years."
While the high-income, highly educated parents who are setting name trends will often choose uncontroversial names that are simply out of fashion (e.g., the rise in the popularity of Sophie over the past few years), some parents will go for out-there or unique names in order to show their status.
For instance, according to Levitt and Dubner, the twenty names for white girls (born in California during their study) that best signified high-education parents include such unusual fare as Rotem, Oona, Atara, Elika, Neeka, and Flannery. By choosing these names for their daughters, parents are hoping to show that they are on the cutting edge of baby naming and that they are highly-educated individuals.
Of course, using your child's name to signify status is not necessarily a revolutionary concept. What's interesting is what the costs of that name will be -- for the child.
Two recent studies have shown that having an unusual name can negatively affect your life. The first study showed that people found those with easily-pronounced names to be more likeable than those with difficult-to-pronounce monikers. According to Dave Mosher of Wired, this has to do with the fact that our brains favor information that is easy to use: "When we can process a piece of information more easily, when it's easier to comprehend, we come to like it more."
In addition, the New York Daily News recently reported on a new study showing that a "bad" first name can negatively affect others' perception of you: "The majority [of study participants] responded that they would actually rather remain single than enter a relationship with someone with an undesirable name."
Clearly, the costs of unique baby names are fairly high. And if Rotem and Oona were to catch on and make their way down the socio-economic popularity ladder, then high-income, highly-educated parents would likely begin choosing newer, high-cost baby names. Because the uniqueness -- which will cost their child -- is just as much a mark of prestige as a $30,000 handbag.
That's because theoretically, the parents of baby Wingspan and little Banjo are showing the world that they have enough money and prestige to take on the potential social costs of their child's name.
Showing Off Doesn't Pay
Ultimately, using goods to indicate your prestige or status means you are living life for other people. But everyone else is far too busy with their own status-seeking (or serenity-seeking) to really care about how much your commute, your busy lifestyle, or your child's name costs. It's much better to simply say "No, thank you," to status-seeking behavior and make the decisions that will best fit your life and your family.