Rating: 
Summary: The Worst Book To Ever See the Light of Day
Review: About 100 years after Veblen coined the phrase, "conspicuous consumption," Frank finds himself trying to make sense of outrageous consumption patterns during another era of prosperity. Why the love for expensive grills, cars and watches? The answer, in brief, is status. Because social status is measured relative to others (rather than by absolute standards), consumers step on a treadmill that finds them trying to outmeasure their peers. This treadmill doesn't lead to any greater happiness. Though individual satisfaction tends to increase with greater income and greater income slightly associates with higher satisfaction in the U.S., the elevations in per capita income within countries over time don't correspond with greater satisfaction (above some threshold). We have more stuff than our grandparents but not more satisfaction because of it. Pointing out that society as a whole would be better served by reallocating the resources wasted on individual luxury items by investing in clean air and water, paying teachers and maintaining roads, Frank shows that this conflict between individual and group interests represents a public goods problem. Though legal restrictions, social norms and other mechanisms have been advanced to solve these dilemmas elsewhere, Frank favors a progressive consmption tax for the U.S. This contention muddies the water between advocacy and the science of economics. In his support of it, as elsewhere in the book, he overgeneralizes from a few lines of evidence ("all evidence shows that...") to broad conclusions, leaving the reader questioning how completely the relevant evidence has been reviewed. Yet the clarity, readability and timeliness of this book make it well worth reading. Will it help us get off the status treadmill?
Rating: 
Summary: Thought Provoking For Social/Behavioral Science Students
Review: As the review title indicates, students & professors of economics, politics, psychology and other social & behavioral sciences will benefit from perusing the pages of Bob Frank's commentary on contemporary American life. Regardless of whether you agree with Professor Frank's solution to our society's "arms race of consumerism", the book makes the reader think about the materialism evident in much of the U.S. Using amusing analogies to describe human behavior related to "buying excess," Frank explains these activities with theories of psychology and economics. His insight provokes thought and entertains the reader throughout the book. Whether explaining why many middle class couples spend $5,000 for the latest Viking model gas grill for their patio, or describing how two millionaires childishly built larger and more lavish yachts just to own the biggest and best cruiser in the world, Frank delivers interesting examples which help provide an understanding for why many people do the things they do. Read this book if you are a student or teacher of the social or behavioral sciences. Whether you agree with Frank's prescription to correct societal consumerism or you don't believe America has a problem, this book entertains the reader and stimulates ideas for discussion. Well worth the read!
Rating:
Summary: Thought Provoking For Social/Behavioral Science Students
Review: As the review title indicates, students & professors of economics, politics, psychology and other social & behavioral sciences will benefit from perusing the pages of Bob Frank's commentary on contemporary American life. Regardless of whether you agree with Professor Frank's solution to our society's "arms race of consumerism", the book makes the reader think about the materialism evident in much of the U.S. Using amusing analogies to describe human behavior related to "buying excess," Frank explains these activities with theories of psychology and economics. His insight provokes thought and entertains the reader throughout the book. Whether explaining why many middle class couples spend $5,000 for the latest Viking model gas grill for their patio, or describing how two millionaires childishly built larger and more lavish yachts just to own the biggest and best cruiser in the world, Frank delivers interesting examples which help provide an understanding for why many people do the things they do. Read this book if you are a student or teacher of the social or behavioral sciences. Whether you agree with Frank's prescription to correct societal consumerism or you don't believe America has a problem, this book entertains the reader and stimulates ideas for discussion. Well worth the read!
Rating:
Summary: Smart for One, Dumb for All
Review: Economist Robert H. Frank has written a stimulating book that integrates research from psychology, evolutionary biology, and economics to address the raging "luxury fever" that is needlessly consuming precious resources in "overdeveloped" economies. Frank documents how luxury consumption in western industrialized countries has been rising at an astronomical rate, even though the latest psychological research shows that there is scant correlation between this consumption and levels of stated life satisfaction. Why, then, are wrist watches costing $20,000, huge houses of 10,000 sq. ft. and more, and myriad other forms of conspicuous individual consumption rapidly increasing, even as social spending on education, infrastructure, the environment, and other things that would raise the average level of life satisfaction in society decreasing? Frank describes how this perverse "luxury fever" occurs when individuals pursue their strong individual incentives to increase their relative position in society by consuming more than their peers. But when everyone does this, relative consumption (and perceived life satisfaction) remain constant, while absolute consumption (and related negative impacts on natural resource use, the environment, education spending, etc.) soars. Luxury fever is one of a class of phenomena known by various names in different disciplines, including: negative externalities, social traps, social dilemmas, the prisoner's dilemma, and the tragedy of the commons. Frank cleverly labels these phenomena as situations that are "smart for one, but dumb for all." Once one begins to look, there are clear examples of these situations everywhere, ranging from drug addiction to pesticide overuse to arms races to environmental pollution and even women's fashions. While economists have recognized these phenomena, they have largely been relegated to the status of interesting but relatively minor anomalies. But Frank clearly points out just how pervasive, important, and wasteful they are, and how eliminating them can save literally billions of dollars while actually improving welfare. The "invisible hand" of the market cannot be relied upon to solve these problems, because, as Frank notes: "Far from being a principle that applies in most circumstances, the invisible hand is valid only in the special case in which each individual's rewards are completely independent of the choices made by others. In the rivalrous world we live in, precious few examples spring to mind." (pp 271) Frank's solution to luxury fever is a strongly progressive consumption tax. This could be done in the US with a simple one-line amendment in the tax code to exempt all savings from income taxation. With this modification, the income tax would tax only consumption, without having to specify which consumption was "luxury consumption" and (because of its steep progressivity) without adversely affecting the poor. This consumption tax would have the effect of increasing the costs to individuals of conspicuous consumption (and thus reducing it), while freeing up significant resources to pursue increased "inconspicuous consumption" - things like education, infrastructure, environmental protection, and family time. Given the psychology of relative consumption and satisfaction noted above, this could occur with absolutely no decrease in welfare. In fact, average life satisfaction would increase because relative individual consumption would not change and the neglected forms of social consumption could be increased with the resources from the tax. Why has so obvious a "win-win" move not already occurred, and what are its chances in the future? Frank answers the first part of this question with the famous joke about the economist who sees a ten dollar bill lying in the street and concludes that it couldn't really be a ten dollar bill because if it were someone would have already picked it up. The first step is to clearly and convincingly lay out the problem and the solution as Frank has done - in effect to point out the existence of the $10 bill just lying on the ground. But the idea of a broad consumption tax (and the reasons for it) has been around for many years. It was first proposed by Thomas Hobbes in 1651 and has surfaced many times during the last 300 years. Frank concludes that it will just be a matter of time before the obvious benefits of such a tax are recognized and the plan is implemented - after all, most political changes have a significant gestation period. But there are also obvious impediments to implementing such a tax in the current political climate. In political systems run more and more by special interests it is difficult to implement any policy that might hurt even one of those interests - even if only in the short run. Overcoming the political impediments to any form of meaningful tax reform will require "government by discussion" rather than by interest groups and media manipulation. If social issues of the importance of those in Frank's book can be discussed rationally by the society at large then such obvious social "win-win" solutions as ecological tax reform and a progressive consumption tax can be appreciated and implemented. In a few countries this kind of social discussion occurs reasonably well, but in most it is a far cry from the current political reality. Just as it is very difficult for an animal caught in a trap to free itself, it is also very difficult for a society caught in a social trap to free itself, even when the nature of the trap and the way out has been clearly identified. Lets hope we don't have to bite off our social foot to escape the invisible hand.
Rating:
Summary: Highly Recommended!
Review: Every reader should consider this book critically. Author Robert H. Frank's thesis is that runaway consumption of extravagant luxuries is a major problem in American society. This concept may have seemed more valid in 1999, at the height of the dot-com bubble, when the book first rolled off the presses, than it does in 2004. The intervening recession has done a lot to rearrange household consumption priorities. Yet one need only look at the houses, cars and home entertainment systems on the market to recognize that the thesis has not entirely lost all merit. For the more muscular theoretical foundation of this premise, readers are referred to the superior 100-year-old classic The Theory of the Leisure Class by Thorstein Veblen. Even in the shadow of that light, Frank's observations about the pressures to consume - especially the evidence that he marshals for an evolutionary compulsion to "keep up with the Joneses" - merits notice. While the author's proposed remedy of a consumption tax is sure to be controversial, we believe this book deserves to be read and appreciates its unusually stimulating, accessible writing on economics.
Rating:
Summary: A provocative look at consumer spending incentives
Review: Frank's book looks at human nature as the underlying cause of increasing luxury spending and the consequent decrease in savings. His claims certainly make intuitive sense -- who can doubt that many of the goods we purchase are heavily influenced by what we observe others purchasing, or that some of our excess money could be better spent? The extent to which we can make more lasting increases in well-being by allocating money differently is less clear. Much of the evidence cited by Frank is more anecdotal than rigorous, and while it feels correct, he leaves a skeptical reader not quite convinced. The biggest value of the book might be in bringing renewed attention to a very interesting idea, the consumption tax. Frank provides a nice history of the idea and why it has failed the past, leaving us with the hope that its shorcomings are not insurmountable. Some parts of the book suggest Frank's leftward leanings, which may turn off conservative readers and cause them to dismiss his ideas out of hand. However, the open-minded reader will find much food for thought in this well-written, provocative look at consumer spending patterns and incentives.
Rating:
Summary: Let Them Be Lemmings
Review: Let Them Be Lemmings Some factual common trends are noted by Frank: in general, wages in the U.S. have been static and even in decline for most Americans in recent decades. Yet, proportional per capita spending on luxury goods has increased significantly. The results according to this author and others who've conducted numerous studies and research is a weaker economy, high personal debt, longer working hours, less sleep, and having to work until death, in debt of course. We're all aware of the American "gotta have this or that" bug. Many have it, but many don't. Some don't want it. Why do certain luxury goods and "gadgets" become oh-so-popular in American society? Frank notes, and correctly, that the desire for many to purchase certain material things is by no-doubt influenced by what others are buying or want to buy. The concept of "social status" is a concept where human beings in mass-consumption cultures judge each other in this context in RELATION to our peers. These "peers" may be the strangers we live next to in suburban anonymity, our co-workers, friends, or the strangers we see driving next to us in our daily suburban traffic jams. (Note my use of the word "stranger"). The commonly known terms such as "keeping up with the Joneses," the status treadmill" the "arms race of consumerism, Consumer Feticism," and Velben's "Conspicuous Consumption" are presented. But not from a moralistic standpoint but a behaviorist, biological, psychological, and an economic standpoint. The first part of the book informs us about many things we already aware of but expands upon it through the various academic fields already noted above. The second part of the book is the "solution part." What the author thinks can be done to change the current pattern. Here's where it can get sticky for some. The solution Frank offers from his research is a thesis on Human Behaviour, and he proposes a "political-economic" solution: taxing consumption. The solution is the part of this work that leads to the economic analysis of the "hypothetical" once again, and there's nothing wrong with that. Although theoretical, the first part is interesting, and the second part may be for some.
Rating: 
Summary: He's found a novel excuse for a high-tax welfare state
Review: Luxury Fever opens with an anecdote describing the author's worn-out $89.98 propane grill, purchased in the 1980's. Mr. Frank laments that the nation seems to be stuck in a luxury arms race. He is forced to replace his inexpensive grill with one costing several times as much, losing a little bit of his humanity and time with his family in the process of earning the required money. Alas, the spectrum of grills and other products has lost its economical end. American society collectively spends far too much of its treasure chasing gold-plated versions of basic products, and Americans are forced to work impossible hours to keep up with the Joneses. His proposed cure for this problem is a tax that purports to punish wealthy individuals who dare to spend their money on luxury versions of common goods. Mr. Frank, I have some good news for you. I hope you haven't bought an expensive grill yet, because Sears sells a Kenmore propane grill, model 15400, for $129. This is not $89.95, but correcting for inflation it's almost certainly less than $90 in 1980's dollars. This is not an obscure label; it's available to Mr. Frank. This tale is repeated in product after product. I bought my first basic car for 1/5 of my first annual salary as a neophyte software developer. Although you can spend several years' salary on a car, you can now buy a basic car for less than 1/6 of a neophyte software developer's salary, and you will get a product substantially more durable, more reliable, environmentally cleaner, and safer than my first car. The range of most products has increased, mostly by extending the range at the expensive end a lot and also extending the range in the cheaper end a little. The bottom end of most markets has not disappeared, whether the product was high-tech or mundane. There are a few markets, like housing and bike helmets, that have lost their bottom end for regulatory or safety reasons. $19.95 "Skid Lid" bicycle helmets are gone; good riddance, I say. Dormitory-style low-cost housing is also gone. Mr. Frank then continues by claiming that the extension of important markets in the expensive directions inconveniences even those people who can't afford to or who don't want to purchase upscale goods, because if you don't spend yourself into oblivion you look shabby, with serious consequences. One of his leading examples is, for example, the need to wear a $2000 suit when interviewing for a job. I realize that it is a liberal axiom that societal rewards in an enthusiastically capitalist society is not primarily the result of hard work or native talent, but the result of capricious factors, but I've been on both sides of the interviewing desk recently. I've been offered both of the jobs I've interviewed for in a modest $200 suit, and when I was part of the team discussing a prospective hire we spent an hour or so discussing matters of substance, primarily the applicant's past achievements. If an applicant was odiferous or came to an interview in torn jeans and barefoot, we might not have seen past that and we might not have hired him. However, if he chose to spend $200 instead of $2000 for a suit to interview for an upper-middle-class professional job, the suit wouldn't matter. Perhaps it would matter for a high-roller $500,000/year job, but I'm not sure I believe that, since the hiring process for such a job would be even more meticulous and less likely to be capricious than in my market. Furthermore, the "requirement" for a $2000 suit is substantially less onerous to a person who would credibly apply for a $500,000/year job than it would be for me. Another market where Mr. Frank believes that luxury fever squeezes out people who choose to spend modestly is housing. Here he feels that the problem that results is that you must overspend to get into a district with good schools. This may have been true in the 1960 decade, but starting around 1970 most states passed legislation or had court decisions that funded schools from a statewide tax base. There are differences in the academic achievements of various regions, but much of this variation is a result of parental involvement, not parental wealth. I don't think Mr. Frank makes the case that gilded products are forced upon people who would not otherwise choose to buy them, at the cost of their humanity. Furthermore, if you do assume that society overspends on luxury goods and underspends on humanity, I don't think he makes the case that a steeply progressive consumption tax is the cure for the problem. I think he likes the idea of a progressive tax and of the social welfare state that it could support, and I think he built his argument to fit that result.
Rating: 
Summary: Provokes but doesn't think it through
Review: Mr. Frank's thesis is this: many of the consumer goods we buy are purchased not for the intrinsic pleasure they bring, but for the pleasure of keeping up with or surpassing the Joneses. By taxing consumption instead of earnings, people will buy cheaper luxury goods. This will keep all of the pleasure of the consumption race but raise extra tax dollars to spend on things that everyone truly wants for their intrinsic value - like cleaner air. It will also have the effect of increasing savings (because income is not taxed until spent, the incentive to invest is boosted). This makes us all richer long-term as capital investments grow our standard of living. The theory is well-explained -- perhaps too well-explained -- but the proposed solution is not. While Mr. Frank spends a couple of hundred pages explaining the problem, his solution - taxing consumption - is presented without question. But will it work? The goal of producing income is to spend it, and whether it's done now or later, the rich want to spend it all before they die. Doesn't it make sense that not taxing saving would simply defer consumption until later in life, and the rich would buy even *more* opulent goods later? The author never discusses this, or any other potential difficulties. Won't the rich just rent everything instead of buying? Won't people who might otherwise save, be instead persuaded to consume now, since they will be taxed more if they save to buy their dream good in a single future year? The point is not that these objections are unanswerable, but that they seem to never even occur to the author. As for the disdain with which Mr. Frank treats the acquisition of luxury goods, the reader should be made more than a little uneasy. What he says about social pressure may have some merit, but is this the *only* reason someone buys a Ferrari? And what about those of us who do not feel the need to keep up, and buy goods purely because they will enrich our lives in other ways? Again, these shades of grey do not slow down Mr. Frank's thesis. And the reader who is told he is "polluting" by choosing to wear an expensive suit - the author uses the analogy without qualification or irony - would be justified in feeling that Mr. Frank would have done well to temper the observations in his book with an understanding that human motivations are not as black and white as he thinks.
Rating:
Summary: Luxury Fever also explains why US jobs are disappearing.
Review: Professor Frank's title for Chaper 10 'smart for one dumb for all' sums up much of the recent business and political behavior in our country. Jobs are going to China and a flood of imports are drowning our factories because our government and business leaders are practicing "smart for one" while our country slides toward the status of a 3rd world nation. It is said that a nation's wealth is measured by what it can manufacture - not by what it consumes (who said that?) Every CEO worth his or her salt these days is moving manufacturing operations overseas as fast as possile to get a piece of the short-term profits under "smart for one". If this continues, the 'dumb for all' effect will doom us to to poverty and China will (again?) rule the world of commerce. Luxury Fever is a great book which should be read by every person who cares about the USA over the long haul - especially our elected officials. I'd like to see RH Franks (Luxury Fever) team up with Ravi Batra (The Myth of Free Trade) as lobbyists to return sanity to our country's business climate. Adam Smith has been taken out of context. When he spoke about the "Invisible Hand" (of commerce) there was an ethic in the land that accepted pervasive empathy as a given. Today, our leaders push unbridled avarice and seem to think that empathy is only for the weak 'players'.
|
