What are Positional Goods?

Positional goods give their possessors a peculiar status given the fact that other people do not possess them or there is a limit to the number of people that possess the goods. The supply of a particular product within an economy will determine whether such good is a positional good or otherwise. Usually, positional goods are valued higher than other goods when placed on the same utility, these goods are not only more expensive but are more superior in nature. Individuals purchase positional goods for the status or prestige that comes with them for instance, luxury bags, brand-name watches or Rolex, yacht, and others. Positional goods are of esteem value to their possessors, given the fact that they distinguish these people from others who do not possess the goods. Positional goods are not limited to products, certain services, professionals and occupations can also be classified as positional goods.

Why are Positional Goods Important?

Positional goods are present in every economy, whether it is a developed or emerging economy. Although developed countries and affluent regions have certain goods that are classified as positional, other economies also have certain goods, services, and occupations that are regarded as positional because they are exclusive to a certain number of people. Positional goods maintain their value and exclusivity only when they are accessible by a limited number of people when such goods are easily accessible and affordable by the masses, they no longer qualify to be positional. This explains why a particular product, occupation or service might not maintain the prestige of a positional good forever, this is because such a product can be displaced and its place taken over by other positional goods.

Examples of Positional Goods

Fred Hirsh and Thorstein Veblen are some of the economists gave definitions and context to positional goods. A typical positional good is a high-end good that is only accessible and affordable by limited people. Such a good cannot be purchased by the masses, they are exclusive to the affluent ones. The common examples of positional goods are; Prada, Roles, Lamborgini, Louis Vuitton, and others. Vacation in luxurious places, tourism at classy points can also be regarded as positional goods. However, certain products have classy names but may not be positional goods if their prices are lower than those of positional goods. A good example is the popular Chevrolet Corvette but this product does not fall into the category of positional goods due to its price.

Related Topics

• Budget Constraint
• Radner Equilibrium
• Opportunity Cost
• Opportunity Set
• Marginal Analysis
• Utility

• Self Interest
• Cost-Benefit Analysis
• Enlightened Self-Interest
• Fisher's Separation Theorem
• Ratchet Effect

• Total Utility (Economics)
• Efficiency Principle
• Expected Utility
• Subjective Theory of Value
• Positional Goods
• Utilitarianism
• Indifference Curve
• Time Preference Theory of Interest
• Incentives
• Marginal Benefit

• Diminishing Marginal Utility
• Sunk Costs
• Production Possibilities Frontier
• Law of Diminishing Returns
• Economic Efficiency
• Efficiency Theory
• Productive Efficiency
• Capacity Utilization Rate
• Allocative Efficiency
• Pareto Efficient
• Comparative Advantage
• Criticisms of the Economic Approach
• Behavioral Economics
• Normative Economics
• Positive Economics
• Invisible Hand
• Sunk cost