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Luxury Fever: Why Money Fails to Satisfy in an Era of Excess
By Robert H. Frank.
New York: The Free Press, 1999. Pp. x, 326. $25.00.
Professor Frank's new book contains elements of his previous works, especially his 1995 book with Cook. I was somewhat hostile to the ideas of that book (Walker 1996), but after reading Frank's new one, I must admit-he's convinced me! This book is well written, effectively argued, and entertaining.
The primary focus of the book is on the importance of relative versus absolute consumption levels in affecting consumers' happiness. Frank reviews compelling biological and psychological evidence that happiness is not significantly linked to absolute levels of consumption but is linked to relative levels. (If readers are not swayed by Frank's appeal to scientific evidence, then perhaps they should read Seneca, Marcus Aurelius, or Boethius.) According to Frank, this aspect of human nature largely explains why many are compelled to spend money on luxuries just to appear to be more successful than others. He regards the increasing amount of luxury spending as wasteful, since these consumers could obtain the same benefits by consuming luxuries with lower price tags, so long as the positional aspect of the consumption remains unchanged. For example, if I am interested in signaling my financial success to others, I may be inclined to buy a Patek Philippe wristwatch for $20,000. But the quality of this as a signal of my wealth is not dependent so much on the high price tag as it is on the fact that it's a relatively expensive watch. I could just as easily signal my wealth in a different world, where 95% of people spend...