Marshall Vs. Thorsten Veblen Theories Of Behavioral Economics

Professor John Maule from the University of Leeds describes new research into the way that consumers choose a product.

From consumer’s perspective, the motivation of their purchasing high-end products is complicated. According to the report of Mintel (Academic.mintel.com, 2013), which showed that the reason why a large number of customs have purchased luxury merchandise in UK. There were 44 percent of female interviewees and 48 percent of male interviewees bought high-end goods due to the good quality. In addition, 31 percent of men and 18 percent of women consider the sophisticated technique

Sociocultural: In the recent years, the desire to appear wealthy has attributed to the increased popularity in luxury products. Also, the desire for luxury goods was promoted by effective advertising and TV programming that promoted conspicuous consumption to middle-income consumers. Middle-income consumers also tend to “reward” themselves with luxury items.

Behavioural economics is the study of the effects that psychology has on the decision making of the economy. This tends to be the way that people think and feel when they are spending money on a certain good or service. The great economist Adam Smith was the first follower of this idea through his book “The theory of moral sentiments” which dates back to 1759. However, it took over 100 years to get a more clarified meaning of how big of a role the psychology of a buyer plays in economics. In behavioural economics there are seven basic principles which all contribute to the decision making process. Behavioural economics can explain how people will react to different situations such as times when there are no economic problems and times when

Most economists assume that consumers are "economic buyers" who logically evaluate choices to get the

Schor, a professor at Boston College, argues that we are living in “the cycle of work and spent” which motivates the people to “spend longer hours of work” in order to buy materialistic items based on their appearance to the world. She states the “competitive consumption has shifted out to the vast majority of the population” and “the media has a very pronounced bias towards showing upscaled or affluent consumption” (Schor). Schor highlights the kinds of “socially visible items become increasingly important as a part of a competitive consumer system.” And because of that, “the growth of the aspiration gap has led American

Accompanying reasonability, the fact that expensive cars can be a status symbol does play a role in the consumers’ decision; however, people have bought expensive things to flaunt since currency has existed. “The only people who bought expensive cars for looks were wealthy adults. Most people bought

We are part of a tremendous consumer culture that thrives on the latest trends and has an incessant need to be satisfied, this can be seen in standard economics through the supply and demand model. Indeed, the more the market demands the more is supplied to meet said demands; thus there is a never-ending cycle that occurs between the supplier and the consumer. However, this raises the question: What guides consumers in their transactions?

Within Veblen’s, The Theory of the Leisure Class, chapters 5 and 6 thoroughly explains the social norms of economic status / evolution of economics. Chapter 5, talks a great deal about who it is most common that people spend more money than they actually wanted to. However, this happens due to the want to be just like everyone else, so they buy branded items which typically cost more than off brand ones. Once people get in the habit of always spending more than they wanted it is harder to start budgeting.

The social class a customer belongs to becomes a major source of his or her beliefs, values and behaviours. Family, friends and acquaintances become a primary source of learning values for individuals. For example, the attitude people have towards education is determined by the social class they belong to; since individuals from a lower class tend to give it less importance than individuals from the middle class. Similarly, people from the lower class look for immediate gratification and marketing appeals like “buy now, pay later” works immensely well with this class. One the other hand, middle class individuals usually believe they have to power to govern their own destiny through hard work. Attributes like morality and respectability are

Emulative consumption was described over 100 years ago by Thorstein Veblen in his Theory of the Leisure Class. In an unequal world life is a battle for respect

Gil, L., Dwivedi, A., & Johnson , L. (2017). Effect of popularity and peer pressure on attitudes toward luxury among teens. Young Consumers, 18(1), 84-93.

As such, the result is that the members of every class spend their energies striving to meet an ideal. Then inevitably, they choose the option of taking part in emulative consumption in order to maintain their good name, as failing to participate will result in them falling behind. In conclusion, the leisure class sets the norm for all other classes and that is part of their power in capitalism and

The overall sales of luxury goods in the year 2009 is expected to be more than US$150 billion and Asia contributes 10% to it. The concept of luxury is now not confined to only to Europe and US, the Asian subcontinent contributes majorly to it, with India and China as the newly emerging markets. Professor James Twitchell (2002) comments on the democratization of luxury and the changing consumer psychology These new customers for luxury are younger than clients of the old luxe used to be, they are far more numerous, they make their money far sooner, and they are far more flexible in financing and fickle in choice. They do not

Once there is the decision to consume or purchase good s or services the common factor then becomes the need for that product which is at times evaluated based on attainability and price. In many situations if consumers are not motivated by the need to purchase then the possibility lies that they will not purchase. There may be different justifications that consumers internalize when making the decision to purchase a particular product at its given price. Different decisions supports the need to purchase a product such as