Status Consumption as a Factor in Product Demand Research Paper

Status Consumption as a Factor in Product Demand - Research Paper Example Evolutionary economists contend that the current status of economic systems has been largely driven by growth of knowledge over time (Loasby 135). Choice, which has been a factor in retail economics, is therefore not so much about preference, but a function of knowledge and rules controlling the knowledge itself. As such, preferences are just but a subset of the knowledge-controlled rules. Noteworthy, rules and knowledge in consumer consumption, unlike the conventional idea of preferences, are imperfect. Thus, the consumers are ever in a decisional trap of â€Å"knowledge of what to want†; a trap that often leads to coerced consumption (Earl and Potts 626). Generally, there are two preconditions that must hold for consumption to be considered status consumption. First, there must be a sense of belonging, often referred to as â€Å"degree of commonality† concerning relative desirability of association with certain products or brands. Secondly, consumption of such products or association with such brands must be socially visible, that is, openly displayed (Deaton 34). In other words, status consumption follows â€Å"demonstration effects." Social visibility is particularly essential because of the moral hazard effect related to socially non-visible commodities. Consumers acquire incentives to amplify their consumption with the intention of gaining positions in social settings. For those that show their consumption patterns externally (self-reporting), individual's concern with status is one factor that has been identified to motivate such actions.