The iPhone powers growth but not recorded growth Credit - Apple registered traedmark

This is a great deal more interesting to economists, illustrative of more that economists know about the world, than it seems. Owning an iPad or iPhone from Apple is predictive – not all of the time but often enough to be useful – of high income status. As opposed to just being a twat with more money than sense. The economics here illustrates so much though, it tells us what Apple’s actual marketing strategy is (Veblen Goods!) and why they price as they do.

To put this crudely, untruthfully, but usefully informatively, an iPhone or iPad will get you laid:

Anyway, if you’re fortunate enough to own an iPhone (at least a new one that doesn’t have a smashed screen) then you can consider yourself rich.

That’s what a study conducted earlier this year suggests, anyway.

Nothing is that clear cut of course. But in investigating the following, it’s useful:

We analyze temporal trends in cultural distance between groups in the US defined by income, education, gender, race, and political ideology. We measure cultural distance between two groups as the ability to infer an individual’s group based on his or her (i) media consumption, (ii) consumer behavior, (iii) time use, or (iv) social attitudes.

In English, we can tell stuff about a persons’ class, social status, by looking at what they own and do.

OWNING an Apple iPhone is the best way of determining whether someone is rich or not – replacing posh mustard.

That’s according to a new study that examined the best indicators of proving someone’s wealth.

That’s the basics of it. If someone has an iPhone or iPad we can put them in the top 20% of the population – some 70% of the time. Which, when you think about it, isn’t all that surprising, they’re expensive pieces of kit and there are cheaper ways to do much the same thing out there.

Except that’s not it, not at all. We human beings are absolutely obsessed with status. Who has it, who doesn’t. Having it very definitely gets you laid. Sorry, but there it is, that’s the way it works with most mammals and definitely with primates. What is status changes according to sex – gender if you prefer. But the more status you’ve got the more people will offer to bump uglies with you.

So, if we’ve got something which is an indicator of status – say, owning the latest shiny shiny bling – then having that will gain you more status, more sex. Such a thing is called a Veblen Good, after an economist called Veblen who didn’t say it was all about sex but did say that conspicuous consumption is about status and showing it off. There is no explanation for a Rolls Royce other than this. So, Apple has established their products as being markers of status. Owning one thus grants status. So, what should Apple do about pricing?

Clearly, they should price everything nice and high so that the status imparted is maintained. There’s no point in high status goods being cheap, after all, so that just anyone can have them. Once that happens then ownership doesn’t confer status, does it? That is, Apple gets to make extra profits because they’ve got to keep prices high, in order to maintain the status of the goods which is why people – some of them at least – buy them. Which is a pretty neat trick if you can pull it off really.

The only fly in this ointment is the number of people who have gone bust trying to generate that high status association before people are willing to generally pay the high prices.

Support Continental Telegraph Donate

3 COMMENTS

  1. Or possibly the extra cost is worth it for the ease of use when you have a technologically challenged partner, which leads to common ecosystem purchases as it’s easier to have everyone on iMessage than it is to get them to use WhatsApp

  2. Yup, Apple, more than any other provider of any sort of computer technology, takes pains to own enough of everything (the “ecosystem”) to make things simple for the user. What this says about the user may be that (1) he is wise, (2) he is a no-dirt-under-my-fingernails type who revels in not knowing the technical details, (3) he is an artist/musician doing what artists/musicians are supposed to do, or (4) he follows fashion trends.

    He might be wise, but he might equally be especially susceptible to manipulation to improve his self-image.