Year: 2025
Type: article
Abstract: Consumption is an act of economic interaction, but the process of consumer choice is social in nature. Social influence has been ignored by economic theory. The snob and bandwagon effects were perceived as deviations from the rational choice model, which, however, oversimplifies the diversity of reality. Behavior economics is an attempt to overcome this shortcoming and bring behavior models closer to reality. The consumption of many goods is relative. In addition to functional utility, the social aspect of consumption forms secondary utility, which can sometimes exceed the first one. Secondary utility can be presented as positional or associative. In both cases, utility is a function of the number of consumers of the good. Positional utility is the result of striving to get ahead of others. This type of drive leads to positional competition and can be captured in terms of the snob effect. Goods like these are classified as positional. Their peculiarity is the reversible utility, which creates a hierarchy of consumption within the reference group. The application of the criteria of excludability and competitiveness in consumption makes it possible to define positional goods as highly competitive and conditionally excludable. Associative goods arise from solidarity of consumption, pursuing the goal of being like others. They correspond to the bandwagon effect, the result of which is a mutual increase in utility for consumers of the good within the boundaries of the reference group. This kind of effect can be observed in individual, group and public consumption. In their main features, associative goods are closer to club public goods. The analysis demonstrates their main characteristics as conditionally competitive and excluded from consumption. The result of the study is the definition of positional and associative goods in the general structure of consumption as intermediate between simple private goods that do not create secondary utility and public consumption goods such as club public goods and open access public goods.
Source: Business Navigator
Author: Yurii Miriasov
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4411534490