"See the New Car in the Jones' Driveway?  You May Soon Be Driving One Just Like It"
by David Leonhardt

Source: The New York Times, June 13, 2005.
http://select.nytimes.com/search/restricted/article?res=FB0E11FF385A0C708DDDAF0894DD404482

             "But all my friends have it!" has become a cliché phrase, supposedly uttered by a young person begging his or her parents to buy something.  Of course, adults also buy the same things their peers are buying.  Sorting out the complex reasons we all do this, however, is more difficult.  In the example in this article, for example, people seem to buy the same brand of car as their neighbors.  Why?

             Many times such behavior is dismissed as "Keeping Up with the Jones" or, to use the phrase developed by the great institutional economists Thorstein Veblen, conspicuous consumption.  Conspicuous consumption is the act of buying something in order to enhance your status among your peers and/or people you look up to.  Veblen focused on conspicuous consumption among the "leisure class" (wealthy) when he wrote his classic book published in 1899.  He argued that the leisure class spent money on wasteful, unproductive luxuries and that upwardly mobile people emulated these buying patterns in order to enhance their class status. We can still see this type of behavior today.  Watch closely the television ads for luxury car brands.  They sometimes hint that driving the car will enhance the buyer's status, in addition to emphasizing the quality of the car.

             Status, though, is closely linked with a sense of identity.  We consume certain products to demonstrate to others that we fit in with a particular subculture—which is not necessarily a particular economic class.  For example, you may buy clothes that give you an urban/hip-hop vibe or favor a Goth look.  Or maybe you dress to look like a jock.  Some people also use cars to express a sense of identity.  Are you eco-friendly?  Drive a hybrid, not a gas-guzzling SUV, to make a statement about your political values.

             The author of the article, David Leonhardt, asserts that there may be a much more practical reason why people and their neighbors drive the same brand of car.  It has to do with the importance of information about relative quality.  Read the article carefully and see why Leonhardt thinks that the need for objective information, and not conspicuous consumption, is "driving" (pun intended) the findings in the study of Finnish consumers' car purchases.

• Can you name something you bought because all your friends were buying it?
• What brands of cars did you family tend to buy?  Would you prefer to buy the same brand or something else?  Why?
• How does Leonhardt relate his discussion of the Finnish study to the sales problems faced by General Motors (G.M.)?

"Modern Love: Paradise Lost (Domestic Division)"
by Terry Martin Hekker

Source: The New York Times, Sunday, January 1, 2006.
http://select.nytimes.com/search/restricted/article?res=F10A1FF738540C728CDDA80894DE404482

             Chapter 5 of your text contains a discussion of the book The Two-Income Trap by Elizabeth Warren and Amelia Warren Tyagi.  This book examines some of the negative economic consequences of the rise of two earner families, that is, families in which both the husband and wife work for pay.  Rising expectations regarding living standards—more cars and bigger homes in the suburbs—were one "pull" factor encouraging wives to stay in the labor force.  Warren and Tyagi are concerned that two-earner families' high standard of living makes it impossible for male-breadwinner families to "keep up with the Joneses," pushing women who do not want jobs into the labor market.  The authors are nostalgic for the traditional family model and argue that families were actually better off when relying on one income.

             Other factors sent married women into the labor market in recent decades, and these are illustrated in the column "Paradise Lost (Domestic Division)" by Terry Martin Hekker.  Hekker was a stay-at-home Mom who lost her "job" during a sudden divorce when she was in her sixties.  Rising divorce rates have also encouraged married women to maintain their human capital (see definition in chapter 30) by working for pay.  (Though, reversing the causality, the fact that women can support themselves has also enabled them to institute divorce without fear of impoverishment.)  And, as Hekker notes in her column, paid employment offers intangible benefits such as a sense of purpose and "someplace to go every day."  These intangibles have been a pull factor for working women.

             Finally, Chapter 5 also documents that families now spend more on services such as restaurant meals than they did in the past (see Figure 7 on page 107).  Since jobs in service industries are traditionally female-dominated, employer demand for women's labor also pulled working wives and mothers into the labor market.  Of course, the market for these services, including meals and child care, increased precisely to replace the unpaid work that wives traditionally did in the home.  This illustrates another trend in market economies.  Historically, many of the goods and services we purchase in markets were once made by the family—everything from candles to freshly churned butter to homemade remedies for sickness.  The long-term trend of market economies is to commodify more of these activities, meaning turning them into products that are bought and sold.

• Do you plan to marry or settle with one partner? If so, do you plan to have a two-earner or single-earner household?
• What has been gained and what has been lost as married mothers increased their paid employment?
• Name some other goods and services that you tend to buy but used to be produced in the household economy.