S0907 The Economics of Creative Goods
,
This is a course in which students are exposed to literatures that free them to think independently about how and why they consume things and engage in certain sorts of consumption-related activities. It is by now almost a universal fact that consumption drives economies (China may be the one big exception). But how much do we really know about why people consume (beyond basic needs)?
Economic theory supposes preferences given; it also assumes our choices are transitive (consistent); and that the added satisfaction we derive from consuming additional amounts of the same good/activity in a limited time period decreases steadily. Yet a growing body of experimental evidence suggests these assumptions are untrue or are appropriate to real behavior only in a very limited sense. Even the best applications of the economic theory of consumption to phenomena such as music enjoyment, fashion and addiction, fall short. Yet, far from being impoverished by this discovery, we are in fact enriched by knowing that emotions play a role as well as cognitive processes in our consumption choices; that rewards can be intrinsic and need not be monetary; that certain drug addictions may have nothing to do with rational choice but everything to do with the release of certain chemicals in the brain under the right triggers. And we are better off for knowing that there are wide ranges of activities and goods for which marginal utility does not decrease but increases. Moreover, given the increasing amounts of free time available in developed economies, it is good to discover the sorts of goods and activities which increase novelty, challenge and variety, and thus the pleasure derived from consumption, but which have nothing to do with socially undesirable ways of relieving boredom.
Consumption has long been under suspicion from critical social theorists for the reason that so much of it seems to be excessive – beyond real needs – and trivial, useless. It is a short step to supposing that we are tricked into over-consuming useless things by the manipulations of manufacturers and their advertisers. We also take issue with this perspective, and show students that precisely those properties of goods and activities that yield increasing marginal utility are the ones we associate with “quality” or what some call creative goods; that not everything creative or of quality is high-priced; and that skilled consumption (knowing why we choose) frees us from having to make the assumption that we as consumers are dupes.
The course is thus an encounter with news ways of thinking about consumption – both goods and activities. It ranges over literatures in economic, social theory, behavioral psychology and neuro-economics, but does not require prerequisites.
Teaching and evaluation methods
Given the contentious nature of the issues we deal with it is essential that students explore for themselves the sorts of activities that have intrinsic rewards, discover goods that are creative, and so on. The class therefore is interactive, requiring lots of small exercises which are done in pairs or groups and discussed in class.
There will be a mid-term based on take-home questions.
In lieu of a final exam there will be a research project, done individually, which will itself be a creative good or activity, or at least analyzing a creative good or activity. We have learned in teaching this course for several years that students most value the opportunity to apply things taken from the readings and discussions to a small creative inquiry of their own. Some recent outstanding examples include: an original play on the murky boundary between gift and exchange and what can go wrong when either one is imposed inappropriately on others; an analysis of the creative improvements made to surfboards by users; an inquiry into the ways baseball pitchers’ contracts vary with the number of creative pitches each can deliver; an exploration of an economy without scarcity but lots of creativity, Second Life; an analysis of how money is made within the world of the open-source LINUX operating system by a company like Red Hat; and an exploration as to why high-end fashion houses do not fail even though their original creations are copied by a multitude of others.
Economic theory supposes preferences given; it also assumes our choices are transitive (consistent); and that the added satisfaction we derive from consuming additional amounts of the same good/activity in a limited time period decreases steadily. Yet a growing body of experimental evidence suggests these assumptions are untrue or are appropriate to real behavior only in a very limited sense. Even the best applications of the economic theory of consumption to phenomena such as music enjoyment, fashion and addiction, fall short. Yet, far from being impoverished by this discovery, we are in fact enriched by knowing that emotions play a role as well as cognitive processes in our consumption choices; that rewards can be intrinsic and need not be monetary; that certain drug addictions may have nothing to do with rational choice but everything to do with the release of certain chemicals in the brain under the right triggers. And we are better off for knowing that there are wide ranges of activities and goods for which marginal utility does not decrease but increases. Moreover, given the increasing amounts of free time available in developed economies, it is good to discover the sorts of goods and activities which increase novelty, challenge and variety, and thus the pleasure derived from consumption, but which have nothing to do with socially undesirable ways of relieving boredom.
Consumption has long been under suspicion from critical social theorists for the reason that so much of it seems to be excessive – beyond real needs – and trivial, useless. It is a short step to supposing that we are tricked into over-consuming useless things by the manipulations of manufacturers and their advertisers. We also take issue with this perspective, and show students that precisely those properties of goods and activities that yield increasing marginal utility are the ones we associate with “quality” or what some call creative goods; that not everything creative or of quality is high-priced; and that skilled consumption (knowing why we choose) frees us from having to make the assumption that we as consumers are dupes.
The course is thus an encounter with news ways of thinking about consumption – both goods and activities. It ranges over literatures in economic, social theory, behavioral psychology and neuro-economics, but does not require prerequisites.
Teaching and evaluation methods
Given the contentious nature of the issues we deal with it is essential that students explore for themselves the sorts of activities that have intrinsic rewards, discover goods that are creative, and so on. The class therefore is interactive, requiring lots of small exercises which are done in pairs or groups and discussed in class.
There will be a mid-term based on take-home questions.
In lieu of a final exam there will be a research project, done individually, which will itself be a creative good or activity, or at least analyzing a creative good or activity. We have learned in teaching this course for several years that students most value the opportunity to apply things taken from the readings and discussions to a small creative inquiry of their own. Some recent outstanding examples include: an original play on the murky boundary between gift and exchange and what can go wrong when either one is imposed inappropriately on others; an analysis of the creative improvements made to surfboards by users; an inquiry into the ways baseball pitchers’ contracts vary with the number of creative pitches each can deliver; an exploration of an economy without scarcity but lots of creativity, Second Life; an analysis of how money is made within the world of the open-source LINUX operating system by a company like Red Hat; and an exploration as to why high-end fashion houses do not fail even though their original creations are copied by a multitude of others.
Readings