5 Explain Thorstein Veblens theory of consumption Does he be

5. Explain Thorstein Veblen’s theory of consumption. Does he believe that economic behavior - such as consumption, is driven by utilitarian calculations or by socio-cultural factors? What is the point of conspicuous consumption? What is emulative consumption? What role do envy and invidious distinctions play in this process? What does this imply for the presumed efficiency of a capitalist society? Elaborate.

Solution

Answer:

Thorstein Veblen’s theory of consumption: is known as conspicuous consumption. According to the theory consumers buy luxury goods for showoff or to show their wealth and income to the society.

He believe that economic behavior - such as consumption, is driven by socio-cultural factors

The point of conspicuous consumption: is to show that the demand of people for a commodity is also socially affected.

Emulative consumption: meaning when a person tries to imitate the consumption demand of another person in the society means one’s consumption function is affected by its neighbor’ demand for commodities.

Role of envy and invidious distinctions in this process: it plays important role because a person does not want to envy himself from the society due to his consumption demands so he tries to imitate his neighbor’s social status by buying luxury items so that can don’t feel discrimination in the society.