Goods That People Buy But Wish Did Not Exist

Abstract

People buy some goods that they do not enjoy and wish did not exist. They might even be willing to pay a great deal for such goods, whether the currency involves time or money. One reason involves signaling to others; so long as the good exists, nonconsumption might give an unwanted signal to friends or colleagues. Another reason involves self-signaling; so long as the good exists, nonconsumption might give an unwanted signal to an agent about himself or herself. Yet another reason involves a combination of network effects and status competition; nonconsumption might deprive people of the benefits of participating in a network, and thus cause them to lose relative position. With respect to real-world goods (including activities) of this kind, there is typically heterogeneity in relevant populations, with some people deriving positive utility from goods to which other people are indifferent, or which other people deplore. Efforts to measure people’s willingness to pay for goods of this kind will suggest a welfare gain, and possibly a substantial one, even though the existence of such goods produces a welfare loss, and possibly a substantial one. Collective action, private or public, is necessary to eliminate goods that people consume but wish did not exist. Legal responses here are limited, but they might be contemplated when someone successfully maneuvers people into a situation in which they are incentivized to act against their interests, by consuming a product or engaging in an activity they do not enjoy, in order to avoid offering an unwanted signal.

Keywords: Signaling, posiitonal goods, network effects, networks, relative position

JEL Classification: D1, D85, D11, P36