Snob effect

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The snob effect (from English snob : busybody) is a quantity effect and belongs to the abnormal demand behavior . This effect always arises when consumers only pay attention to the goods from a certain degree of exclusivity and also assume that the goods will not be acquired by a broad class of consumers ( snob value ). For the purchase decision , the price is rather irrelevant; What is decisive is the anticipated behavior of other consumers.

The snob effect is therefore one of the negative network externalities . A household's purchasing decision then depends on how other consumers behave. The cheaper a product is, the less incentive for the "snob" to buy.

Differentiation of the term from the consumption of validity and the Veblen effect

Because of its somewhat misleading name, the snob effect is often confused with the consumption of validity (also known as the veblen effect ). In the case of validity consumption, goods are preferred because of their higher price; this kind of consumption aims to show what one can afford in order to define social status. The higher price is therefore directly responsible for the higher demand. With the snob effect, on the other hand, the uniqueness of the good consumed is the decisive factor - the price only has an indirect influence on it. The difference can be illustrated using the example of the originally non-conformist fashion of the punks : In their demand behavior, the punks behaved according to the snob effect - they aimed to look as different as possible. On the other hand, this fashion had nothing to do with a high price.

The Giffen paradox, in turn, describes a phenomenon according to which, in certain situations, the demanded quantity of a good increases when its price increases. The classic assumption is that demand decreases when price increases (law of demand).

Explanation

Normally, the microeconomic household theory assumes that economic agents act completely independently of one another. With the snob effect, however, there is a dependency on consumer decisions. This means that a certain group of consumers will buy more of a good if it knows that another group of consumers will buy less of the good. For example, a snob will only buy a particular car if he knows that only he or a few others will own it. The reason for the snob's purchase decision is not generally to be found in the price, even if the price ensures the desired exclusivity for most snobs. The snob effect can be seen as the opposite of the follower effect (also known as the bandwagon effect ).

If one looks at the corresponding demand function, the quantity of goods sold increases as the price increases. If the price is increased further, however, the demand behavior changes again because the consumer may not be ready to pay the high price.

The resulting elasticity of demand is also called inverse elasticity of demand .

literature

  • A. Woll: General Economics. Vahlen publishing house
  • Robert S. Pindyck, Daniel L. Rubinfeld: Microeconomics. Pearson Germany, 2009. Chapter 4.5.2. The Snob Effect, p. 191ff.

Individual evidence

  1. ↑ Robert S. Pindyck, Daniel L. Rubinfeld: Microeconomics. Pearson Germany, 2009, Chapter 4.5.2. The Snob Effect, p. 191ff.
  2. ↑ Gustav Vogt: Fascinating Microeconomics: Experience-Oriented Introduction. Oldenbourg Verlag, 2013, p. 43.
  3. ^ Heinz-Dieter Hardes, Alexandra Uhly: Fundamentals of economics. Walter de Gruyter, 2007, p. 166.

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