Veblen goods
en.wikipedia.org
en.wikipedia.org
I collect camera lenses for example and see people drop crazy money on old Leicas. And they are nice lenses but it's such a stereotypical choice that I can't help but negatively judge anyone who actually buys or aspires to them. Their brand's mystique has cheapened them for me. And let's not even get started on Hasselblad...
It's a watch. It tells you what time it is. You can get a pretty durable one that'll last you nearly a lifetime for under $100, especially if you get a digital one since there's no moving parts to break.
So why spend $5,000+ on one? I mean, yeah you might want to get something fashionable and shiny, but that doesn't require a $5,000 purchase.
I feel that the only reason to spend $5,000 on a watch is so that you can show off to other people that you can afford to piss away $5,000 on a watch, which is just silly.
Most people who have some amount of money spend it on things that aren't strictly utilitarian.
Joking aside, there are people who refuse to ascribe anything BUT utilitarian value to things as a sort of anti-consumerist view. Going to be hard to convert them.
(Casios are rated between and 1 and 0.5 secs/day, while a Rolex Chronometer is rated to 2 secs/day. High end quartz watches that cost thousands can be rated to 5 secs/yr. Of course a phone that supports NTP on a network should be at least as accurate as that.)
So the only reason for buying an expensive watch is to signal that you can afford an expensive watch. And if you're going to do that, you might as well have a piece of solid gold surgically implanted in your forehead.
If that's ridiculous - and it is - why is it any more ridiculous than spending tens or hundreds of thousands buying a watch that may well be ugly, inelegant, bulky, or even vulgar, and isn't even outstandingly good at being a watch?
There certainly is signaling for many people's purchases of high-end watches (moreso with Rolexes which are easily recognizable compared to some "better" or more expensive brands... Pateks generally are quite understated) but some people appreciate the esthetics, or the intricacy of the mechanics. And really, if you do have money, is it really different from collecting stamps (even less utilitarian value, generally) or classic cars (yeah, you can get from point A to point B, but with far less comfort and safety than in a modern econobox) or anything else?
Not everything in the world is about purely utilitarian value.
(In all seriousness, one of the most common ways I check the time, besides my phone unlock screen, is checking how much sunlight I have left by the "1 hand above the horizon = 1 hour" method.)
There are social and political circles in which demonstrating the ability to piss away money without caring is the only way to rise in status/power. You think it's silly, and from a standpoint of pure utility, that may be true. But it doesn't make it less important to the people who move in those circles.
I'm not a fancy watch buyer but I'll try to explain some of the thinking.
To luxury buyers, it's not a "watch". Instead, it's "jewelry for the wrist that just happens to tell time."
Therefore, explaining the technical superiority of the quartz crystal accuracy of a $10 Casio watch compared to the mechanical springs of a Rolex watch is an ineffective critique. It's not even relevant that the Rolex keeps time less accurately.
That's probably the best description I've seen for appreciation of expensive watches.
FWIW though, if you were to wear a knock-off of a luxury brand with your fancy suit at some event, would anyone even notice without taking a close look to specifically examine your watch?
The highest revenue share I saw was for a fake Rolex watch (which was marketed as a fake!), which had a 50% revenue share.
usually it is noticeable by taking a [even not so close] look at the wearer :)
For example, looking at that guy in his "fancy suit" an idea of knock-off would never ever cross your mind :
https://www.nytimes.com/2012/04/06/world/europe/in-russia-a-...
https://thelastpsychiatrist.com/2011/11/luxury_branding_the_...
So, 5k, no, a couple hundred... yea, if it's made well enough.
I really ought to go get it fixed... I smashed the glass with one of my rings. :(
This is everywhere and unfortunately a somewhat important social dynamic. I mean, what do you really think an MBA is? It's someone who can prove they can not work for two years and throw away $100k+ to party. And Goldman/McKinsey want to hire people who are part of the social class that can do that.
Here's the disconnect you're struggling with: you don't value watches. Or more accurately, you don't appreciate them beyond simple utilitarian timekeeping. That's fine, most people don't really care about them. Instead of trying to relate to people who buy expensive watches by valuing watches - which you clearly don't - relate to them through the broader experience of spending a lot of money on a hobby.
Do you have any hobbies you spend "a lot" of money on, perhaps more than what's required just to engage with the hobby? Keep in mind that "a lot" is arbitrary. I have a friend who spends thousands of dollars on card games. I don't see the appeal, but it makes him happy and trading card games can be a fun activity. That hobby "doesn't require" a purchase of the most expensive, collectible versions of various cards, but people do it anyway. I'm pretty sure my friend doesn't do it to signal that he can spend that money :)
The point is this: what's expensive for one person is affordable for another, and what's valuable for one person is frivolous for another. There's not much beyond that. It's all relative - in principle it all comes down to whether or not you spend strictly more than you need to on a thing so you can enjoy it beyond its raw functionality. If you do, then you're no longer treating that thing as a tool, you're treating it as a form of art. Like all forms of art, expensive watches are polarizing and subjective, and they attract a subculture of people who discriminate between things which seem utterly arbitrary to people who don't appreciate them.
I mean, I don't mind if others have such hobbies -- to each their own. As a matter of fact, I have some friends, too, who are into collecting expensive watches. Yet, I still don't get it, just like in the grandparent comment.
Your imagination needs work. Being on HN, I'd assume that you have at least one hobby that necessitates a significant amount of electronics (gaming console + TV, monitor + PC, laptop). Any one of these (if you actually care about the hobby) will run you thousands of dollars.
You'll probably dodge at this moment and say how necessary or important or utilitarian all those things are, but that's just because you like your hobbies and don't like other people's.
I'm not sure I see the distinction between "wearing it" and merely "owning it", as they both seem somewhat passive activities (if you'll pardon the oxymoron).
In other words, I'm asking, is the hobby one of collecting (as with stamps or coins), or is there something involved in the wearing that is the fundamentally interesting/engaging part of the hobby?
Perhaps what most commenters (including me) are skeptical of is that hobbies have also been known as "pastimes" and are, presumably enjoyable, ways to pass the time.
I suspect that most here would agree that for "expensive" hobbies, such as high-end computer gaming, automotive racing, or aviation, they would still participate in it and call the hobby by the same name if they didn't personally own the equipment necessary to engage in their chosen activity (and merely had unrestricted, or even shared/restricted, access to it).
I'm not so sure this is the case, however, for something like art collecting. If that person doesn't get to keep the art, isn't that really just an art buyer, not a collector?
I am, indeed, surprised by that, but only, again, because it seems passive. Is there more to it, like being seen? Seeing others' reactions? I'm genuinely curious.
I also suspect you're unusual, which is why I was hoping to hear from the original commenter. I could, of course, be quite wrong.
> If there was a service where I could wear different watches without owning them I would be all over that.
I did a web search for "luxury watch rental" and found something at least vaguely similar. If those services aren't what you're looking for, maybe that's a business idea, along the lines of pooling/sharing private jets.
> If I could only own watches to display them in my house and never take them out I wouldn't bother.
Seems like a false dichotomy. However, it's closer to the actual practice (as I understand it) of owning multiples units but only ever wearing one at a time.
Of course, I'm lumping "collectors" in with "wearers", but that's partly because it's so difficult to distinguish from external observation and partly because some commenters have described watches as art, something which doesn't generally have an activity it can be used for.
Jaeger-LeCoultre owner here
I tried the Ultra Thin, but I found it was a bit too thin for my wrist.
i see what you did there, you rascal--use a forum where people might care about such signalling and make sure they will know your watch in the future, so when they see it on your wrist, they'll wish they were you.
-- non-watch wearer (see how much cooler i am for not caring?)
And when it comes to the hobby of expensive watches...you get nothing but an expensive watch.
Every other hobby, you get something.
PC gaming? You've got games you can play, and a monster computer that can run them with beautiful graphics.
Card games? You've got a collection of cards and can quickly build new decks to adjust to the changing meta.
Model trains? I've seen some really impressive miniature towns people have built around a model train set.
I just don't understand expensive watches.
> Here's the disconnect you're struggling with: you don't value watches. Or more accurately, you don't appreciate them beyond simple utilitarian timekeeping.
That sums it all up pretty well. If I'm spending a lot of money on something, I want there to be at least something useful or enjoyable that I'm getting out of it, beyond the enjoyment of simply having it, which typically is not something ever feel about things. Things are just things. The only value they have IMO is their utility.
(Though I would certainly attach sentimental value to something that was made by hand by a relative and passed down)
And like art, it has a robust secondary market, which means some of the rare ones can go up in value, sometimes by a lot. People don't buy art because they get something, they buy art because they simply appreciate it.
Everybody is different. I'd pick a thousand dollar watch over a MTG collection or a gaming tower any day (mostly because I don't think gaming is valuable at all)
So it is with watches (or anything else, really). You think that the enjoyment of a watch is simply having it, but that's not how the hobby is enjoyed by its enthusiasts. Watches like this are enjoyed by talking with other collectors, admiring the movement, geeking out over the features ("complications") built into the watch, commiserating over ingroup gossip, etc.
It's not for everyone, and I don't blame people for not "getting" watches! The subculture might be somewhat inscrutable from the outside, and it can be easily dismissed as an idle fancy for the rich, but there is a lot more depth to it than what you're seeing.
The majority of the point is signaling, yes. To determine whether or not it is silly, you need to consider the goals.
A majority of the point of college for a lot of people is also signaling. Is that silly? Again, it depends.
You may dislike comparing an expensive watch to an education, but there are people out there with a lot of money who care a lot more about your ability to look like their wealth-peer than they do about your education.
I'd rather have the education, too, but there are lots of people in the world who don't work that way.
(I have a couple nicer-than-cheap watches. One is due to features, the other is just gorgeous. Neither was anywhere near $5k.)
Wealth generally signals success, and if you're successful no one cares about your education. Formal education also doesn't mean intelligence. You can be super smart and have no degree, and be successful.
I feel like you chose a bad example. Designer handbags for instance, seem to be more geared towards status symbols, although I am sure there are exceptions.
A chris reeve sebenza is an example of an item that is desirable primarily because of it's craftsmanship and only secondarily due to its price. If you own one, the chance of someone else being aware of its value is practically zero.
What's even more silly is your ignoring that fact.
So-called status symbols are actually quite effective at getting people to pay attention to you, which is kind of important if you wish to compel them to do things.
If that's true - and it seems to be - that strongly suggests politics and economics are superficial and essentially trinket- and appearance-driven, and only very distantly related to genuine achievement or merit.
IMO that's not just a problem, it's a disastrous failure of spirit, ethics, and imagination. It's fine if your institutions and values are operating at a pre-rational barely sentient level, but if you're trying to aim higher, it really isn't such a good thing.
How is any of this new information? It's so well-known we've even got a silly name for the "power suit".
However, the fact that something with so many small moving mechanical pieces can actually function still blows my mind to this day.
Not quite.
Though the only other one that can be a status symbol to any significant degree (among the assumed demographic) is a class ring--assuming you went to an "appropriate" school.
Alternatively, to hell with "acceptable", wear the jewelry you want to wear.
Considered as an informastion and signalling good, Veblen goods start more closely resemblin Giffen.
"so, you are're just packaging $500 of speakers in nice boxes and selling it for $80K?"
"you don't understand. The people are paying for the price."
A lot of that, and a lot of the remarks on this page, seem to have to do with a glamour of money, a faintly sexual worship of money. And the 'love' in that seems love of themselves, and not in a good way.
My father-in-law's like this. Every time he visits he tells us all about his home theatre setup and how he's spent $15k on this component and $20k on that other component, and that it was a bargain because it usually costs $35k but he got a good discount because he's friends with the store owner. You bet he is, with the stuff he buys! But hey, it makes him happy.
They exist where the underlying trait being signalled is difficult to communicate clearly or effectively, a circumstance especially true of social status signalling. Paradoxically, the hyperwealthy need not signal so loudly (they themselves are sufficiently well-known), but as one descends the ranks, say, below the top ten and above, say, the 90%ile (higher or lower as you prefer), that signalling becomes more necessary and costly.
This is similar to a whole set of fad-driven behaviours, ranging from speech and etiquette to clothing, diet, music, politics, management, and programming fashions, where the underlying domain is complex. Eventually the faad itself becomes dominated by poseurs whose false affectation dilutes the signal.
https://old.reddit.com/r/dredmorbius/comments/62uroa/clothin...
Related, diamonds & gemstones, and loss or clear signalling effect as inexpensive alternatives emerge. See earlier:
I have seen people turn down free software because they mistakenly believe an expensive program must be better. But that's not really the same, since that isn't a form of showing off.
The only instance I can see where this might be true is with the Gold Apple watch (and that’s obviously not a purely software issue):
http://uk.businessinsider.com/apple-watch-edition-sold-out-i...
But in general I can’t really see this...
This old piece of common wisdom is probably mostly obsolete now that software is generally sold as a subscription...
The good jobs and appreciating real estate, admittedly limit how well this theory fits together, but a big HCOL city is prestigious and exotic in large part because of, not despite, its price.
1. Jobs 2. People 3. Events/activities
You can pay the San Francisco premium and have a massive job market, a million people to befriend/date/learn from/etc, and thousands of activities and experiences to engage in constantly. Or you can live in a small town with far fewer job opportunities, far fewer people, and far less to do.
Small town life is not a bad choice if it's what you want. But if you want to live in a lively city, you're going to pay for it, because a lot of people want that life and you're competing with them for a space to do it.
Now, if you're talking about Palo Alto, maybe.
As I said, I'm grasping a bit because I'm not sure I fully grok it. But there is something that would be lost about Manhattan if it became cheap. I believe it's not just the three items you list, but also the concentration of people that not only want to, but crucially, can afford the price of entrance. Beverly Hills comes to mind as an example, why do the rich and famous want to live there if not to also be surrounded by other rich and famous? Perhaps that's closer to the common link you mention in Palo Alto.
I will concede that for some portion of people, the prestige of living in San Francisco is a part of the draw. There are other factors that are probably more important for a lot of people, though. Comparing to Houston, San Francisco is literally 5 times as densely populated, which changes the feel of the city drastically. Houston is larger in terms of population, but it's also massively sprawled. That sprawl drives down the price of homes but also makes much of the city feel like the suburbs (probably; I have not visited).
Houston also spends >100 days/year at >90F, which makes it not comparable to a coastal city for people who do highly value temperate weather.
Urban rankings are quite surprisingly durable, with the US being among the worse examples of this, given, say, the rise and fall of numerous formerly-great cities, say St. Louis or Detroit, or to a lesser extent Boston or Philadelphia.
Globally, Rome, London, Paris, Tokyo, and other major metropolises have sustained themselves for centuries. In cases, millennia.
The Bay Area's biggest risk is likely its high cost of living given induced housing constraints. If an alternative centre emergess, as Los Angeles did in the 11920s, following the 1906 fire and earthquake, plus San Francisco's transport and water limitations (neither the bridges nor Hetch Hetchy existed at the time), as well as LA as a resource hub (oil). That advantage remained until the 1990s defence contraction, which hammered Los Angeles.
If you really want to see durability of prestige, though, look to universities. Virtually all the great mediaeval European universities remain notable, and several (Oxford, Cambridge, Paris, Leipzig) remain world-class. In the US, Harvard and Yale (among others) pre-date the country itself. Even in California's public university system, founding campuses Berkeley ("Cal") and UCLA, founded in 1868 and 1919, respectively, greatly out-rank subsequent expansion campuses.
(UCSB, 1944, Riverside; 1954, Davis, 1959; San Diego, 1960; Irvine, 1965; Santa Cruz, 1965; Merced, 2005. UCSF medical school, 1873, is not a general-education campus.)
Veblen goods are an information adjunct to a complex state that the buyer wishes to communicate more clearly. In this, they're related to a broader Gresham's Law dynamic, where the complex state is a "good coin", and the Veblen good makes communicating the "coin's" value, and differentiating it in the marketplace, more effective.
Though there may well be a rents dynamic to this as well.
HCOL cities, where housing decisions and dynamics are driven by earning rather than signalling characteristics, are rents, but not information goods in the sense of Veblen.
(A high-status, marquee, mansion or apartment more closely resembles a Veblen good, though for signalling purposes this cannot apply to an entire regional housing market.)