Paul Bloom says that standard theories of luxury consumption are wrong because they fail to account for the way beliefs about an object’s history can infuse it with a sort of talismanic value. I think he is right that a lot people buy luxury goods neither to signal social status nor for the sensory pleasure delivered by superior watches and scarves and automobiles. Yet I remain hazy about Bloom’s alternative explanation of luxury consumption.
Bloom seems to run together several different phenomena. His kids’ baby shoes are a sentimental reminder of a treasured past. Their value is idiosyncratic and authentically personal. Owning something that once belonged to a famous person encourages a sense of spurious intimacy with a high-status figure. The market value of JFK’s sand wedge is a relatively impersonal function of the great man’s cultural cachet. Is that like baby shoes at all? And a new Patek Philippe watch is like either of those things . . . how?
People buy expensive things for all sorts of reasons.
Yes, some things remind us of other things and can therefore seem to be haunted with the value of the things they remind us of. When we touch them it is like we have come into thrilling direct contact with things we can’t otherwise touch. But pointing out how objects can refer to things beyond themselves doesn’t explain the nature of the value they have come through history or association to embody. Our intense fondness for babies and the cultural significance of presidents haven’t much to do with one another. If a Patek Philippe is haunted by the value of something else, what exactly is it?
Bloom suggests that all these objects are infused with extraordinary value by our beliefs about their histories. But he also tells us that not only beliefs about provenance matter. Wine tastes better if we think it’s expensive. Protein bars taste worse if we think they are made of soy.
In the end, Bloom seems to be saying that the value of luxury goods is a function of our beliefs about them. This must be true, but is it informative? What in particular do people believe about luxury goods that makes them so enchanting? If it turns out a Ferrari derives its value from beliefs such as, “This is an exquisitely crafted object of palpably superior quality and not only makes me feel like I’ve arrived, but shows it,” then I am not sure we have gotten far.
That said, I agree that the value of a consumer good is largely a matter of the meaning assigned to it. I also think that there are many different kinds of people. The sheer variety of beliefs people must have about the things they buy makes any unified theory of the value of luxury goods unlikely. People buy expensive things for all sorts of reasons.
Now, economists say that it is efficient to tax harmful side effects of economic activity, such as the pollution emitted from factories. But markets are full of harmful side effects we rightly ignore. For example, it harms you if I open a hot dog stand next to your hot dog stand. But this sort of competition tends to help hot dog consumers, so we encourage it.
Suppose my neighbor buys a Ferrari and I feel bad because I have only a Volkswagen. Is that more like a polluting factory or a new hot dog stand? I say it is more like a hot dog stand. If I am not in the hot dog business, then your hot dog stand won’t hurt me. And if I am not in the business of caring what people think of my car, then your Ferrari can’t make me feel bad about mine.
Even without saying much about the particular beliefs that drive luxury consumption, Bloom’s idea that the value of a good flows from the meaning assigned to it by the consumer undermines the idea that luxury consumption is like toxic smoke from the mill, harming everyone who comes in contact with it. The inevitability of disagreement about the meaning of this or that luxury item suggests that they can’t reliably broadcast any signal beyond “I am rich.” My neighbor, let us suppose, adores his Ferrari mainly because he believes every piece of it was handcrafted by a mustachioed artisan raised from birth to build just that one piece with perfect precision all the while singing in a lilting Italian tenor. Nevertheless, I believe he is trying to signal status with the gaudy machine. “There goes that pathetic, attention-seeking schmuck!” I think, happily, every time he drives by.