5 min read

Links on Status and Culture - August 2023

Links on Status and Culture - August 2023
Get in: The dog on the left is the economics paper, and the dog on the right represents stealth wealth.

Two mini-essays on two big topics: an economics paper that provides new evidence for status value, and the social mechanics behind "stealth wealth"

Each month I review the latest developments in status and culture within the framework of my book, Status and Culture. (Other than few past months when I was suffering from writer’s block and couldn't get it out...)

Basic Theoretical Principle: The Economics of “Superiority Seeking”

Alex Imas and Kristof Madarasz published a paper in top economic journal, Review of Economic Studies, called “Superiority Seeking and the Preference for Exclusion”, in which they posit that “People derive pleasure from consuming a good or possessing an attribute that others want more but cannot have.” They then show through mathematical modeling how this explains a wide range of real-life economic phenomena. (Also props for probably being the first journal paper to open with a Henry Rollins quotation.)

This idea of “superiority-seeking” is quite established in sociology and social psychology, but the authors show how this works within the framework of economics. And in doing so, they uncover (at least) three interesting things.

First, previous economists who have looked at status seeking, such as Thorstein Veblen and Robert H. Frank, have emphasized the signaling power of certain goods — i.e. people buy expensive cars to show other people they can buy expensive cars. Imas and Madarasz acknowledge this but note that we also find value in simply knowing that we own goods that others don’t. They write, “Perceptions of exclusivity rather than observability of one’s own consumption is the key driver of increased demand in our framework.” This provides further evidence that there is a general status value of goods based on both (1) a conscious desire to publicly establish one’s superior position, and (2) an internalized unconscious sense of superiority from self-identifying as “someone who owns such exalted things.” The second part is often labeled as “mimetic desire” à la Girard, which is fine as long as we don’t attribute this to magic. Our presence within certain status groups informs us which goods and behaviors mark a higher social position, and it’s logical that we come to desire them. But this is where things get complicated: We’re all in different status groups, so status values are always relative. I personally wouldn’t feel any “superiority” if I own one thousand pogs more than you or bought a rare pair of Balenciaga sneakers, because I don't compare myself to people who want them.

Second, the paper’s model offers economic proof for why the “streetwear” model of retail works so well. The classic advice in economics was that “Firms should not choose to restrict supply while profit opportunities are seemingly positive.” If The Gap sells 10,000 T-shirts over one weekend, economists would tell them to print way more to tap the unmet demand. The authors conclude from their model that this approach is incorrect: “Firms and marketers can extract greater rents by artificially rationing the actual or perceived supply of goods and services even while employing a uniform price.” Brands instead should make less than they can sell. Likewise, “the firm would be better off shutting down the market for poorer individuals.” It’s therefore more lucrative to burn unsold clothing rather than sell it at a discount.

Third, the authors suggest that this superiority-seeking mechanism explains the American political malaise of our time — i.e. the fact that lower-income people vote against government programs that would benefit them. The lower middle-class would rather keep the minute superiority of having very little than have a lot with everyone else. “Increasing the minimum wage to the level of their income would eliminate this [status] boost, which leads the poor-but-not-poorest earning group to oppose the policy. In fact, the decrease in the superiority boost may well be the largest for those who are currently just one income notch from the bottom.”

Overall the paper works to update the economic models to better match our sociological and political realities, but admittedly, it also highlights an extremely pernicious fact about humans: We like things because other people can’t have them. Businesses will go on exploiting this, but those seeking radical utopian political solutions need to think strongly about how to ameliorate this part of the human condition.

Basic Theoretical Principle / New Buzzword: “Stealth Wealth”

In my counterproductive proclivity to only write about unique topics, I have avoided writing about the “stealth wealth” / “quiet luxury” “trend,” even though there’s an entire part of Status and Culture on Old Money (Chapter 4, Section 2) that lays out the mechanism for why this aesthetic emerges.

A good intro piece was Rachel Tashjian’s explainer at The Washington Post. And recently at The New York Times, the always reliable Guy Trebay wrote “What’s the Status of Flaunting Your Status?” which collected some nice ethnographic details such as the $220 Forbes & Lomax light switches, Bunny Mellon “hanging her best Braque in a basket room,” fifty million dollars as the new threshold for “trophy real estate,” and the fact that rich people used to go wild in private during the Eighties since there were no internet photographers to immortalize their activities online.

All of this media attention on unmarked Loro Piana baseball caps raises the question, however, is “quiet luxury” an actual trend in consumer behavior or just an over-extrapolation of Gwyneth Paltrow’s trial outfits? The Atlantic’s Amanda Mull suggests that stealth wealth is a “fake trend,” in so much that it works well as TikTok discourse but isn’t particularly pronounced in the culture at the moment. She writes, “The real secret to how the wealthy dress is that most of them aren’t any better at it than those in lower tax brackets. Rich people are expensively dressed, but many are not necessarily well dressed.”

Here’s my take: Quiet luxury is a real phenomenon but not new. (Old Money by Nelson Aldrich, Jr. should be required reading.) In fact, there is a very clear sociological mechanism that creates the aesthetic. In fighting against New Money’s claims on status, Old Money seeks to (1) devalue New Money conspicuous consumption as a status marker, (2) recenter signaling away from raw money and onto time being rich, which is demonstrated in worn-down items with “patina,” and (3) focus attention to subtle details that outsiders can’t read. These actions require a style anchored in anti-conspicuous consumption, which in the past culminated in what we call Ivy and Preppy. Today's version of this style is perhaps based around Loro Piana-type brands. Whatever the case, the fact that globalization continues to create a huge number of newcomers, strivers, and imposters who flock to big-logo luxury means that there will be an aesthetic backlash against that New Money look within pre-existing wealthy families. (More on this in S&C, Chapter 10, Section 2).

To Mull’s point, though, a lot of “Old Money” — Paris Hilton, the Winklevoss twins, etc. — would like to be New Money. With so much mingling between the two groups, nothing will arise that approximates the specific Old Money style of mid-century America. There will be a demand for more subtle luxury in a loud market, but this is unlikely to result in a singular, dominating dress-down style (putting aside the fact that tech bros already dress down.)

Reading List

I overbuy bargain English academic books at my neighborhood used book store for ¥100-¥300 each, but this is probably on the healthier side of the vice spectrum (although someone told me the dust is very bad for my allergies). As much as I tend to read those, a friend recently hand carried some recent non-fiction books from the U.S. and so...

Ben Davis: Art in the After Culture: Capitalist Crisis and Cultural Strategy
I read this one immediately. It’s a good introduction to the intersection of art, technology, and capitalism in our era: namely, radical politics, cultural appropriation, AI, and ecological activism. Based on this article, I hope Davis considers writing an entire book on Beeple.

Katy Kelleher: The Ugly History of Beautiful Things: Essays on Desire and Consumption
Reading now. A series of refreshing personal essays that grapple with the fact that there is always something untoward behind the most pleasurable parts of life. Read the New York Times review.