The Nature, History and Significance of the Concept of Positional Goods

Reflecting its title, this article is divided into three sections. The first section outlines the contrasting ways in which the term ‘positional goods’ has been defined since it was first coined by Fred Hirsch in 1976. It is argued in this section that whereas Hirsch was thinking of goods of which it is true that for some of the members of a society part or all of the satisfaction derived from possessing them is the enhancement of social status due to the fact that such satisfaction is possible only for a minority, R. C. O. Matthews, Robert Frank and Ugo Pagano each defined the term in a substantially different way, so as to support his particular line of argument. The second section assesses the extent to which Hirsch’s concept was anticipated by earlier writers, including Adam Smith, John Rae, Nassau Senior, Augustin Cournot, Karl Marx, John Stuart Mill, Thorstein Veblen, Philip Wicksteed, A. C. Pigou, James Meade, James Duesenberry, Harvey Leibenstein, Roy Harrod, W. G. Runciman and Staffan Linder. The third section discusses the significance of recognition of the existence of positional goods for the predictive and policy analysis of markets, inequality, and economic growth.