Money, social status, and happiness: Reflections anchored in Veblen and Smith

Abstract

Despite the considerable difference between Veblen and Smith's views on capitalism and its benefits or harms, both have similarities in how they view and evaluate traits of human behavior. At the limit, they share similarities in the interpretation of what individuals pursue in the course of their lives. For these theorists, individuals seek to obtain positive evaluation from their peers, a kind of social certification. To this end, they pursue consumption patterns capable of causing distinction and validating their social "approvals", translated into attention and admiration from society. However, while Smith saw the pursuit of status through conspicuous consumption as a stimulus to economic dynamism, Veblen regarded it as a generator of waste and waste detrimental to social welfare, claiming work as a socially superior channel for acquiring social respect. This essay explores the considerations of these two great economists on this issue. The discussion places emphasis on current social issues, especially about individual decisions, consumption patterns and their impacts in social terms.