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Positional good
Positional goods are goods valued only by how they are distributed among the population, not by how many of them there are available in total (as would be the case with other consumer goods). They have been theoreticized by Fred Hirsch. The source of greater worth of positional goods is their desirability as a status symbol, which usually results in them greatly exceeding the value of comparable goods.
Various goods have been described as positional in a given capitalist society, such as gold, real estate, diamonds, and luxury goods. Generally any coveted goods, which may be in abundance, that are considered valuable or desirable in order to display or change one's social status when possessed by relatively few in a given community may be described as positional goods. What could be considered a positional good can vary widely depending on cultural or subcultural norms.
More formally in economics, positional goods are a subset of economic goods whose consumption (and subsequent utility), also conditioned by Veblen-like pricing, depends negatively on consumption of those same goods by others. In particular, for these goods the value is at least in part (if not exclusively) a function of its ranking in desirability by others, in comparison to substitutes. The extent to which a good's value depends on such a ranking is referred to as its positionality. The term was coined by Austrian-British financial journalist Fred Hirsch, and the concept has been refined by American economics professor Robert H. Frank and Italian economist Ugo Pagano.
The term is sometimes extended to include services and non-material possessions that may alter one's social status and that are deemed highly desirable when enjoyed by relatively few in a community, such as college degrees, achievements, awards, etc.
Although Thorstein Veblen emphasized the importance of one's relative position in society with reference to the concept of conspicuous leisure and consumption, it was Fred Hirsch who coined the concept of the "positional good", in Social Limits to Growth. He explained that the positional economy is composed of "all aspects of goods, services, work positions and other social relationships that are either (1) scarce in some absolute or socially imposed sense or (2) subject to congestion and crowding through more extensive use" (Hirsch, 1977: 27).
Hence, Hirsch distinguished categories of positional goods. Some depend, essentially, on their relative positions (pride of superiority, status, and power); others, such as land for leisure activities or land for suburban housing, are positional merely because their total amount is fixed. However, land is valued at least in part for its absolute contribution to productivity, which does not derive from its relative ranking. Thus, some economists (such as Robert H. Frank and Ugo Pagano) include only goods (like status and power) which are valued specifically because of their relative quality. In addition, jural positions can also be considered as positional goods (cf. Pagano and Vatiero 2017, and Vatiero 2021).
Hirsch's main contribution is his assertion that positional goods are inextricably linked to social scarcity – social scarcity relates to the relative standings of different individuals and arises not from physical or natural limitations, but from social factors; for instance, the land in Inter-Provincial Montioni Park is physically scarce, while political leadership positions are socially scarce.
The broad theme of Hirsch's book was, he told The New York Times, that material growth can "no longer deliver what has long been promised for it – to make everyone middle-class". The concept of positional good explains why, as economic growth improves overall quality of life at any particular level, doing "better" than how an individual's grandparents lived does not translate automatically into doing "well", if there are as many or more people ahead of them in the economic hierarchy. For example, if someone is the first in their family to get a college degree, they are doing better. But if they were at the bottom of their class at a weak school, they may find themselves less eligible for a job than their grandfather, who was only a high school graduate. That is, competition for positional goods is a zero-sum game: Attempts to acquire them can only benefit one player at the expense of others.
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Positional good
Positional goods are goods valued only by how they are distributed among the population, not by how many of them there are available in total (as would be the case with other consumer goods). They have been theoreticized by Fred Hirsch. The source of greater worth of positional goods is their desirability as a status symbol, which usually results in them greatly exceeding the value of comparable goods.
Various goods have been described as positional in a given capitalist society, such as gold, real estate, diamonds, and luxury goods. Generally any coveted goods, which may be in abundance, that are considered valuable or desirable in order to display or change one's social status when possessed by relatively few in a given community may be described as positional goods. What could be considered a positional good can vary widely depending on cultural or subcultural norms.
More formally in economics, positional goods are a subset of economic goods whose consumption (and subsequent utility), also conditioned by Veblen-like pricing, depends negatively on consumption of those same goods by others. In particular, for these goods the value is at least in part (if not exclusively) a function of its ranking in desirability by others, in comparison to substitutes. The extent to which a good's value depends on such a ranking is referred to as its positionality. The term was coined by Austrian-British financial journalist Fred Hirsch, and the concept has been refined by American economics professor Robert H. Frank and Italian economist Ugo Pagano.
The term is sometimes extended to include services and non-material possessions that may alter one's social status and that are deemed highly desirable when enjoyed by relatively few in a community, such as college degrees, achievements, awards, etc.
Although Thorstein Veblen emphasized the importance of one's relative position in society with reference to the concept of conspicuous leisure and consumption, it was Fred Hirsch who coined the concept of the "positional good", in Social Limits to Growth. He explained that the positional economy is composed of "all aspects of goods, services, work positions and other social relationships that are either (1) scarce in some absolute or socially imposed sense or (2) subject to congestion and crowding through more extensive use" (Hirsch, 1977: 27).
Hence, Hirsch distinguished categories of positional goods. Some depend, essentially, on their relative positions (pride of superiority, status, and power); others, such as land for leisure activities or land for suburban housing, are positional merely because their total amount is fixed. However, land is valued at least in part for its absolute contribution to productivity, which does not derive from its relative ranking. Thus, some economists (such as Robert H. Frank and Ugo Pagano) include only goods (like status and power) which are valued specifically because of their relative quality. In addition, jural positions can also be considered as positional goods (cf. Pagano and Vatiero 2017, and Vatiero 2021).
Hirsch's main contribution is his assertion that positional goods are inextricably linked to social scarcity – social scarcity relates to the relative standings of different individuals and arises not from physical or natural limitations, but from social factors; for instance, the land in Inter-Provincial Montioni Park is physically scarce, while political leadership positions are socially scarce.
The broad theme of Hirsch's book was, he told The New York Times, that material growth can "no longer deliver what has long been promised for it – to make everyone middle-class". The concept of positional good explains why, as economic growth improves overall quality of life at any particular level, doing "better" than how an individual's grandparents lived does not translate automatically into doing "well", if there are as many or more people ahead of them in the economic hierarchy. For example, if someone is the first in their family to get a college degree, they are doing better. But if they were at the bottom of their class at a weak school, they may find themselves less eligible for a job than their grandfather, who was only a high school graduate. That is, competition for positional goods is a zero-sum game: Attempts to acquire them can only benefit one player at the expense of others.