Difference between snob effect and veblen effect
Answers
It is caused either by the belief that higher price means higher quality, or by the desire for conspicuous consumption (to be seen as buying an expensive, prestige item). Named after its discoverer, the US social-critic Thorstein Bunde Veblen
Snob effect
The snob effect is a phenomenon described in microeconomics as a situation where the demand for a certain good by individuals of a higher income level is inversely related to its demand by those of a lower income level.
Answer:
Hello guys, let me explain this to you in simple terms, what is the difference between snob effect and veblen effect. To understand it read it completely.
Snob effect is the opposite of Bandwagon effect (Demonstration effect). Snob effect mean desire or taste of people to have unique goods which is not commonly owned by major people. In this case, those who buy goods are not only richer person but also a middle class person who have much knowledge about the good than other middle class people. Eg. New model of T.V , gadgets which they can afford and at the same time they goods they owned are also unique.
Veblen effect was named after a American economist Thoristen Veblen. Veblen effect means desire of the rich people ( I mentioned here rich not middle class) to own goods which are not only unique but also prestigious goods which shows there status at higher level. In this middle class can't afford this type of good. Eg. Sports car, jewelry, (which they even don't use but have it to show off)
I hope you all understood this effect well , Thank you
I just wanted to check how fast I can type so please forgive me if I have made any spelling mistakes.