Web Note 8.1: Pleasure and Pain

As rational as we usually are, even economists occasionally get caught up in fads and go overboard. That was certainly true of early utility theory. Philosopher/Economist Jeremy Bentham promoted the idea that pleasure and pain -- utility and disutility -- could be measured and compared.

Chapter 1 of Bentham's An Introduction to the Principles of Morals and Legislation will be enough to give today's students a taste of how some 19th century economists thought we could eventually measure impulses that underlie consumption. It is available from the McMaster University Archive for the History of Economic Thought.

A brief introduction to Bentham and the Utilitarians is available at the History of Economic Thought site. Bentham himself certainly had curious tastes. If you are feeling ghoulish or just enjoy seeing how nutty some economists can be, look at the photo of Bentham's embalmed body and/or read the story of Bentham's head.

Web Note 8.2: Tastes and Choices

While eonomists theorize about how your tastes and income interact with prices to determine your demand, advertisers are harnessing the power of the Web to find out what your tastes actually are. Advertisers have long used various group profiles -- directing ads for expensive cars to zip codes with high average incomes running beer ads on TV shows with a large viewership of 20-35 year-old males, etc. But the Internet holds out the promise of developing individual user profiles -- of knowing that you spent 15.3 seconds on a page with a photo of a red Corvette and have been surfing through the sites of ski resorts.

Article:
Does paradise for advertisers compromise the privacy of consumers? See "The Promise of One to One (A Love Story)" (Chip Bayers, Wired, August 1998).

Web Site:
Even when we shop in person, manufacturers and retailers are trying to probe our tastes. Supermarket club cards are one method -- we get discounts by using a supermarket card and the supermarket gets to track our purchases. Consumers Against Supermarket Privacy Invasion and Numbering is one of the organizations that is trying to organize consumer resistance to this practice.

Web Note 8.3: Veblen Goods

Sometimes we buy goods and services in order to impress others -- to demonstrate our wealth or our good taste. American economist/sociologist/satirist Thorstein Veblen (1857-1929) argued that many of the goods and services we consume are purchased more to impress than to meet our own direct needs. Sellers of such goods may find that reducing the price does not effectively increase quantity demanded as lower prices would make these goods less exclusive.

Conspicuous Consumption:
In Chapter 4 of The Theory Of The Leisure Class, Veblen gave us the term conspicuous consumption. Now we call goods and services that we buy in order to demonstrate our wealth Veblen goods.

Thorstein Veblen:
See a brief biographical sketch on Veblen and/or a list of works by and about him.