Thorstein Veblen

AAA

DEFINITION of 'Thorstein Veblen'

An economist and sociologist who lived from 1857 to 1929 and who is best known for coining the term “conspicuous consumption” in his book “The Theory of the Leisure Class” (1899). He was interested in the relationship among the economy, society and culture. He analyzed the social order and believed that people made purchases to signal their economic status and accomplishments to others. Veblen critiqued the consumption habits of the wealthy and questioned their values. He coined the terms “conspicuous waste” and “pecuniary emulation” (striving to meet or exceed someone else’s financial status). He also founded the school of institutional economics.

INVESTOPEDIA EXPLAINS 'Thorstein Veblen'

Because of Veblen’s analysis, we have the concept of a Veblen good, a product whose demand increases as its price increases because consumers consider it an exclusive status symbol—in other words, a product that is consumed conspicuously. Veblen goods are designer, luxury items with a strong brand identity. They are not sold in regular stores and are highly coveted. Consumers perceive them as being more valuable because of their higher price. These goods are priced so high that only the very affluent can afford them; the higher their price, the less likely other consumers can afford them, and the more buyers perceive them to signal great wealth and success. If a Veblen good's price decreases, demand will decrease because status-conscious consumers will see it as less exclusive. Veblen considered this conspicuous consumption to be wasteful.

The biggest job of Veblen’s career was with the University of Chicago from 1892 until 1906, where he started as a teaching assistant and advanced to become a research fellow, assistant professor and the managing editor of the Journal of Political Economy. His experiences in academia led him to criticize the higher education system in another book, “Higher Learning in America” (1919). Born in America to Norwegian immigrants, Veblen was an outsider and nonconformist with unusual behavior and unconventional views; he rejected neoclassical economics, Marxism, pragmatist philosophy and laissez-faire economics. He wanted to integrate economics with sociology and history to show how the discipline was influenced by human biology and psychology.

 

RELATED TERMS
  1. Estimated Recovery Value (ERV)

    The projected value of an asset that can be recovered in the ...
  2. Book Value Reduction

    Reducing the value at which an asset is carried on the books ...
  3. Registered Holder

    Shareholders who hold their shares directly with a company.
  4. Recovery Rate

    The extent to which principal and accrued interest on a debt ...
  5. Accelerated Dividend

    Special dividends paid by a company ahead of an imminent change ...
  6. Discounted Payoff

    The repayment of a loan in an amount that is less than the principal ...
Related Articles
  1. What Can an Investor Learn from DuckTales?
    Investing Basics

    What Can an Investor Learn from DuckTales?

  2. When Taking Vows, Vow To Spend Less
    Personal Finance

    When Taking Vows, Vow To Spend Less

  3. The Right Place To Retire
    Retirement

    The Right Place To Retire

  4. Closing In On Retirement? Read These ...
    Investing Basics

    Closing In On Retirement? Read These ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center