Talk:Positional good

Here is a comment I put on the page of User_talk:It's_The_Economics,_Stupid!:

I had some questions about the concept of a positional good, since I wanted to help clarify the article. As I understand it, a positional good is one that has value, specifically because of its ranking relative to other (substitute) goods. That is, a spot at a prestigious university is good specifically because it's better than other universities. People can't all go to a top 5 university (as long as there are more than 5 universities people go to). Likewise, social status is positional in that it is defined in terms of its ranking. We can't all be high class.
In this respect, I don't see how land is clearly a positional good. For example, no farmer says, "I want land that is in the top 2% of fertility". Rather, they consider it in the absolute rather than relative sense. He wants land that's fertile enough to justify the cost. Likewise, people don't want land that's "in the top 0.1% closest locations to work"; they want land that's "30 minutes from work" (absolute reference), or more as the pay would justify it. Land only seems to be valued "relative to other substitutes" in the economically trivial sense that people will pay more the better it is. But that's not what is meant by a positional good.
Now, certainly Ricardo's theory of land rent claims that prices of land depend on quality relative to others, but if that's the case, the article should explain land only in this context. I actually don't even see how you could justify Ricardian land rent implying land's positional good quality, because it's just another case of better goods getting high prices, which is not what is meant by a positional good.
Please help clarify this for me or I will have to revise the mentions of positional goods in the land (economics) article and positional good articles.

See his page for the rest of the discussion. Anyone following this, I would appreciate a response. MrVoluntarist 05:37, 14 June 2006 (UTC)

I don't have a reference to Fred Hirsch's book, but this summary of it gives both "lonely beaches" and "high status jobs" as examples of positional goods. Clearly beaches are land in the economic sense - they're not defined in terms of social ranking, but they're still in fixed supply. The article also predicts that high status jobs will earn an increasing "price" (really, an in-kind scarcity rent) as a result of competition, which is the same conclusion that Henry George drew about land.

Please keep all discussion in one place so it is easy to follow. I moved what you posted on my page here.

I read that page, and it appears to use a different definition of positional good than is used in the article. It says that a positional good is one in which your enjoyment of the good depends on whether or not others use the good. That's different from one whose value derives specifically from being better (higher ranked) than another one, so the article should reflect this. Under this definition, fashionable clothing is a positional good (and frequently cited as such) because of the observed phenomenon of how e.g., Nicole Kidman wearing this dress makes it valuable for others to wear the dress (and then of course, all these commoners wearing the dress makes it undesirable for her to wear it).

But again, under this definition, land is still not (usually) a positional good. Whether or not a land is good as a farm does not depend on whether others are farming fertile land (except again in the trivial sense that it affects the supply of food, but this would apply to all goods). Likewise, lonely beaches don't meet this definition; with enough coastline, everyone could enjoy a lonely beach somewhere. That others have a lonely beach doesn't take away from your enjoyment. Now, other people using *your* lonely beach would make you unable to use it as such, but again, this applies to all goods. Use of any good stops others from using that specific good.

So, I'm still not understanding what definition the article is trying to give. MrVoluntarist 16:00, 13 June 2006 (UTC)

Another reference: The neo-Veblenian critique focuses on the social character of certain goods as a source of unproductive competition. There is a closely related strand [...] stemming from the work of Fred Hirsch, that focuses simply on the fact that the supply of some goods is necessarily fixed [emphasis added], and so not subject to expansion with the rest of the economy. [...] Hirsch refers to these as positional goods. [...] In both cases the supply of a given good is governed by a zero-sum logic [...] In the case of positional goods, however, there is not necessarily an element of comparison [emphasis added] involved in their valuation. For example, the amount of waterfront property in a given region is fixed. (Joseph Heath, Should Productivity Growth Be a Social Priority?)

Alright, but again, these are conflicting meanings. Is a positional good one whose supply is fixed, or one whose consumption depends on whether others consume it? Those are different. A positional good can't just be one with diminishing returns, i.e., price increases as demand increases. That applies to almost all goods. The problem isn't referencing; it's determining which definition is to be used. Perhaps we should included multiple conceptions of it in the article? MrVoluntarist 17:41, 15 June 2006 (UTC)

Nation of Rebels references the idea of positional goods, lonely beaches are an example because the more people that use a beach for that purpose, the less desirable it is. It's not neccessarily that the number of people which can consume the good is neccessarily scarce--everyone can wear the same clothes as Nicole Kidman in the previous example. It's that its value is diminished by more people possessing it.

In my opinion, that's different from a good which is intrinsically scarce. There's only so much gold to go around, but the value you get from having gold isn't neccessarily diminished by someone else having it. A positional good is one where its value depends on its exclusitivity. Land in general isn't a positional good in my opinion. Upper-class neighborhoods, wide open spaces, and living in a nature preserve would be positional, since their value is diminished for the more people who have it.

Positional Goods ARE instrinsically scarce in one sense, not everyone can have a fast car since your perception of your car's speed depends upon how fast it is relative to everyone else. But not every intrinsically scarce good is a positional good. You kind of have to either talk about positional goods abstractly, as in "popular clothing" or "fast cars" are positional goods, or you can talk about goods having a positional good component which diminishes when more people obtain it.--BigCow 19:18, 15 June 2006 (UTC)

As MrVoluntarist pointed out, rivalry applies to nearly all goods. It appears that the term "positional good" is used with different meanings by different schools of thought. In Fred Hirsch's book, it refers to any good which is in necessarily fixed supply, including both land and the relative component of otherwise material goods (Hirsch also uses the term "positional economy", as opposed to the "material economy" of non-positional goods). On the other hand, Neo-Veblenians such as Robert Frank seem to focus either on goods which derive most or all of their value from relative comparison, or goods which are allocated thru competitive consumption of other goods rather than by the market mechanism, such as socio-economic status. I think the article should discuss all of these concepts. It may also be that I'm mistaken and Hirsch only intended to talk about non-excludable common pools, as BigCow seems to imply.