The Revaluing of Material Goods, Part 1

Lately I've been devoting a lot of thought to the how's and why's behind the pricing structure of consumer goods, namely in the distinction between their practical and perceived worth, and how that the relation between those factors and their going price changes under various large-scale economic stresses.

Common logic would dictate that in a growing/successful economy, where many consumers are flush to the extent that their basic needs are covered with money left over, that the desire for (and sales of) non-necessary/luxury/status items would increase. This would seem to be partly due to the economic ability of the individual consumer, but also to the convenience-oriented marketplace in which the consumer resides.

The average modern city/suburban dweller is used to being able to get whatever they need, whenever they need it, with a minimum of travel/effort (provided they can afford it). The modern retail world is constantly bending over backwards to make our purchases of goods and services more convenient and desirable in an effort to compete for our business. Competition between various brands/chains/outlets, combined with the short-term rewards of a globalizing economy essentially guarantees that our basic needs as consumers can be met not only easily, but in many cases, cheaply.

Then, in most cases, once a person's needs are safely accounted for, consumer activity quickly turns to fulfilling wants instead. Now, many non-essential items have extremely useful and practical applications, or allow us to make a task that is already possible much quicker or simpler. So if a delineation must be made between the two opposing camps of consumer goods (and I say it must), I would draw it between: goods whose worth is based on their practical value, and goods whose worth is based on their perceived value (luxury, status-associaton, non-practical rarity, etc.).

In our current economic situation, many of the perceived-value goods are significantly more expensive and "desirable" than the practical goods, for obvious reasons. But this common paradigm could be forced to shift in the face of a floundering economy. If any part of the 'web of convenience' (complex and expensive supply chains, dirt-cheap prices on imported goods, ubiquitous and redundant retail outlets) were to fail, then the entire cost structure of the necessary goods sold in those stores could increase quickly. A rising cost or reduced availability of necessary goods would most likely lead to a reduction in demand (although perhaps not, sadly, cost) for perceived-value goods, due to the inelasticity of demand for the necessary ones (hey econ majors/buffs... did I get that right?). Simply put, stuff you actually need may well end up being more valuable than stuff you don't at some point in the future. Which doesn't matter now, because if you're reading this chances are you have everything you need and a whole hell of a lot more (including a bunch of crap that you probably don't even need).

If you get a spare moment soon, take a look around you in wherever it is that you live and take a quick inventory of items whose practical value is trumped by their perceived value. What percentage of your possessions fall safely within that category?

In part two, I will attempt to define a tiered system of goods as ranked by practical worth in a troubled economy.