Table of Contents

Vanity Economics

Vanity Economics

An Economic Exploration of Sex, Marriage and Family

C. Simon Fan

This book presents an accessible and sometimes controversial economic exploration of numerous issues surrounding sex, marriage and family. It analyzes the role of ‘vanity’, defined as social status and self-esteem, in social and economic behaviors.

Chapter 3: Vanity and the consumption of material goods/services

C. Simon Fan

Subjects: economics and finance, behavioural and experimental economics, institutional economics


This book aims to examine the role of vanity in sex and family issues. However, as a benchmark for comparison, it is useful to discuss the existing literature on vanity economics, which has examined the role of vanity in the consumption of material goods and services. As noted in Chapter 2, Adam Smith emphasizes that vanity motivates people to work hard and pursue profits. Veblen puts forward the theory of 'conspicuous consumption', which simply means that people consume to demonstrate their social status, namely to gain vanity. This section provides some contemporary examples and evidence to illustrate Veblen's classical theory. The first story is based on my personal communications. Several years ago, a friend of mine went into a Louis Vuitton store in Hong Kong to buy a handbag for his girlfriend as a gift for her birthday. With the assistance of a saleslady in the store, he selected a handbag priced about HK$12 000. He then had a chat with the saleslady, and asked her about the difference in quality between that handbag and a cheaper handbag he could buy in the street for HK$200. The saleslady smiled, and kindly told him there was no difference. While this answer caught him by surprise, he bought the handbag immediately. He later told me that he did so not for its quality, but because his girlfriend cared only about the Louis Vuitton brand. My friend's personal experience is well known to business people.

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