The bandwagon, Snob, and Veblen Effects

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It is also important to remember that in realizing the bandwagon, snob, and Veblen effects, the basic assumption that the consumers' consumption behavior is independent of the consumption of others, must be ignored.

The bandwagon effect is seen in cases where individuals are trying to "fit in". This effect is shown when the demand of a certain good is increased, based on the assumption or knowledge that other consumers are also consuming that same good. This effect is most easily described using the example of fashion or clothing. People most often like to have the latest fashions, and wear what is in style. They look to people whom they admire, or see what their favorite celebrities, or even their friends are wearing. The individual's desire (demand) to also own and wear the latest fashions will be increased, because they have observed those fashions as what is popular. This is a very simple way to explain the bandwagon effect, and it is an example that most people have witnessed or experienced themselves. The graph (figure 1) displaying the bandwagon effect on the demand curves of several individuals and the market demand, shows that the market demand curve is very elastic. That is, it is sensitive to price change, and also to the quantity demanded. This means that if many people are consuming a good the demand is affect greater than if less people were consuming the good. To further clarify, take the example of attending college. In an environment where most of an individual's peers are going to attend college, the individual will see college as the right thing to do, and also attend college to be like his peers. However, in an environment where most of an individual's peers are not going to attend college, the individual will have a decreased demand for college, and is unlikely to attend. This brings up the next point concerning the bandwagon effect; the taboo effect. Essentially the taboo effect displays the same type of consumer behavior, but in the opposite direction. Therefore, if one notices that a group is not consuming a certain good, that one will see the good as a "social taboo" and also not consume the good. The social taboo effect on demand is a special case. In the graph (figure 2) the demand curve crosses the x-axis into negative territory. This is implying that the consumer would have to be compensated, or paid to even consider consuming a certain good.

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