Yves here. To underscore the key Thorstein Veblen observation, that the well-off signal social status via conspicuous consumption, as in show for its own sake, it is also very well substantiated that more money does not make people happier, once a certain level has been achieved, more or less enough to have a decent lifestyle and a savings buffer. That is admittedly now beyond the reach of most Americans.
I was friendly with a sociology PhD that Goldman has put in a very senior role in what they pretentiously called Human Capital Management to help with organizational design (Goldman had long been extremely skilled at this, particularly in figuring out how to run the place so that politics were limited to the Management Committee and everyone else was kept focused on making money for the firm and not trying to get advantage over each other). He was allowed to do lots of interesting and potentially important studies as part of his job.
The partner asked him to study if more wealth was more satisfying. They expected the answer to be yes. They were horrified when his investigation confirmed the well-established finding that it didn’t. They insisted that he keep that to himself.
A simpler version of this insight, recounted by Morgan Housel in The Psychology of Money:
At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, “Yes, but I have something he will never have … enough.”
By Richard Murphy, Emeritus Professor of Accounting Practice at Sheffield University Management School and a director of Tax Research LLP. Originally published at Funding the Future
Consumption as Social Competition
Veblen argued that consumption often operates as a form of social signalling. Visible goods, such as houses, clothing, cars, and leisure activities, all communicate position within a hierarchy. Their value lies partly in the fact that others cannot easily afford them.
This creates a dynamic of emulation. Lower social groups imitate the consumption patterns of those above them, while the wealthy constantly seek new forms of distinction. The result is an endless upward spiral of consumption that has little to do with real need.
Prosperity, in this sense, becomes a race without a finish line.
Conspicuous Waste
Veblen observed that the leisure class often displays status not just through expensive goods but through waste itself. Time spent in conspicuous leisure, goods that are impractical but costly, and activities that demonstrate freedom from productive work all function as markers of superiority.
This behaviour is not accidental. Waste signals that one possesses resources beyond what is necessary. Ironically, the more inefficient or extravagant the activity, the stronger the signal.
In Veblen’s analysis, capitalism produces an economy where waste becomes socially valuable.
The Cultural Spread of Status Consumption
Although Veblen wrote about a small elite, the logic he identified has spread across entire societies. Advertising, branding and consumer culture actively cultivate status competition. Goods are designed not only to function but to signal identity.
As incomes rise, consumption expands, but much of this expansion reflects positional competition rather than improved well-being. What once marked the elite becomes normalised, and new forms of status display emerge.
The economy grows, but the underlying motivations remain comparative rather than substantive.
Growth Without Satisfaction
Veblen’s analysis helps explain a paradox of modern societies: rising consumption does not necessarily produce rising contentment. When consumption is driven by status comparison, satisfaction is temporary. The benchmark keeps moving.
This dynamic encourages perpetual economic expansion. New goods, fashions and technologies continually reset the hierarchy of status. The result is an economy organised around stimulating demand rather than meeting stable human needs.
From Veblen’s perspective, the system is not merely inefficient. It is structurally restless.
Waste and the Environment
Although Veblen did not write in the age of climate change, his insights resonate strongly today. Status-driven consumption encourages overproduction, rapid obsolescence and the extraction of resources far beyond what is necessary for human wellbeing.
Environmental degradation therefore becomes intertwined with social competition. Individuals consume more not because they need more, but because they must keep up.
What appears as prosperity may in fact be accelerating ecological exhaustion.
What Answering the Thorstein Veblen Question Would Require
Taking Veblen’s analysis seriously would require questioning the assumption that more consumption automatically improves well-being. At minimum, it would involve:
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Distinguishing between need-based consumption and status competition.
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Reducing inequality, which intensifies positional consumption pressures.
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Reframing prosperity around wellbeing rather than material throughput.
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Designing economic policy that discourages wasteful status races.
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Promoting social recognition through contribution, creativity and care rather than material display.
Such changes would not suppress human aspiration. They would redirect it.
Inference
The Thorstein Veblen Question reveals that economic growth can mask profound inefficiency. When consumption is driven by status competition, societies may devote vast resources to goods that do little to improve human well-being. The resulting system generates constant expansion, environmental strain and social anxiety, all in pursuit of relative advantage.
Veblen’s critique, therefore, challenges one of the central assumptions of modern economics: that rising consumption is always a sign of progress.
To answer his question is to recognise that an economy organised around status rivalry cannot deliver lasting prosperity, because its defining feature is perpetual dissatisfaction.
