Re: [Pen-l] The Ratchet Effect

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Charles and Jim,

	Charles, I looked at the link you provided.  Looks like it was  
written by a Libertarian.

What Duesenberry wrote about was the Demonstration Effect, not the  
Ratchet effect.  Very different.  The latter, in terms of the bit  
Charles quoted from the link is simply vendors adding new features to  
products to produce growing sales.  Do car buyers like having a cup  
holder?  Lets have four cup holders, front and back.  How about  
eight?  Let's have lighted cup holders.  Check out Edith Penrose on  
the growth of the firm.  And then there is the phenomena that Steve  
Marglin wrote about so long ago -- it is very hard to go back to more  
modest forms of consumption, once having experienced something  
grander.  That isn't the ratchet effect, either, though it is closer  
to that than the demonstration effect.
	Finally, on "keeping up with the Joneses" -- there is some of that,  
but what looks like that is partly "learning from the Joneses" -- and  
my own view, based on personal bias, is that the learning part is  
larger than the keeping-up-with part.  That is what is terrifying  
about global warming -- we are all learning to add cupholders.

Gene Coyle

On Feb 27, 2009, at 2:36 PM, Charles Brown wrote:

> How much of our higher standard of living is
> due to a rachet effect ,and  growth-is-good and work ethics ?
>
> Charles
>
> http://en.wikipedia.org/wiki/Ratchet_effect
>
> The Ratchet Effect can be seen in long-term
> trends in the production of many consumer goods. Year by year,  
> automobiles gradually acquire more features. Competitive
> pressures make it hard for manufacturers to cut back on the features  
> unless forced by a true scarcity of raw
> materials (e.g. an oil shortage that drives costs up radically).  
> University textbook publishers gradually
> get "stuck" in producing books that have excess content and  
> features. Airlines initiate frequent flyer programs
> that become ever harder to terminate. Successive generations of home  
> appliances gradually acquire more features;
> new editions of software acquire more features; and so on. With all  
> of these goods, there is on-going debate as
> to whether the added features truly improve usability, or simply  
> increase the tendency for people to buy the goods
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