Veblen Effect

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04th Feb, 2022

At 23, Julius Caesar was a junior politician on the way up. But he had an advantage: confidence and brains.

Sailing across the Aegean Sea, he was captured by Sicilian pirates. They demanded a ransom: 20 talents of silver.(That’s about 620kg, worth about $600,000.)

Caesar told them they were being ridiculous. He couldn’t possibly allow himself to be ransomed so cheaply. The pirates hesitated, they were confused. Caesar insisted the ransom must be raised to 50 talents of silver.

(Around 1,550kg, worth about $1.5 million.)

Now the pirates didn’t know what to make of this. Normally, their captives tried to escape as cheaply as possible. They didn’t understand what was going on. But if he said he would double the ransom, why argue?

They let Caesar’s men go back to Rome to raise the money. And in Rome, in his absence, Caesar suddenly became very famous.

No-one had ever been ransomed for such a vast sum before. He must be very special, he must be incredibly important. That ransom demand put Caesar on the political map.

He had just invented the Veblen effect and thus Caesar had effectively made himself a Veblen brand, although Thorstein Veblen wouldn’t give it that name for another 2,000 years. He’d placed a value on himself greater than anyone in Rome. But, as far as anyone in Rome knew, it wasn’t him who had done it but was an independent valuation.

And because Caesar was now so highly valued, his men had little trouble raising the ransom money. They returned to the island and freed him.

Thorstein Veblen was interested in the relationship between the economy, society, and culture. He analyzed the social order and believed that people made purchases to signal their economic status and accomplishments to others. Which leads to the concept of Conspicuous consumption, ie the purchase of goods or services for the specific purpose of displaying one’s wealth. Conspicuous consumption is a means to show one’s social status, especially when publicly displayed goods and services are too expensive for other members of a person’s class.

The Veblen effect is when consumers perceive higher-priced goods to be worth more, simply because they cost more, Like Rolex, Cartier, Bentley, Rolls-Royce, Aston Martin, Louis Vuitton, Christian Louboutin, Harrods, Cristal Champagne etc

None of them may be necessarily any better than the alternatives, but the price alone makes them seem more desirable.

Caesar knew that reality begins in the mind, the most important piece of real estate in which to stake a claim is the human mind. How you stake a claim in the mind is by creating a perception And how you create that perception is by controlling the context. Control the context and you control the mind, Control the mind and you control reality.

Veblen brand can be a good or service that you provide or an individual as Caesar did for himself.

Position yourself well, Make yourself a Veblen Brand and stay blessed forever.