A Review of Robert H. Frank's Luxury Fever

Introduction & Summary

Frank's Luxury Fever is a thought-provoking social and economic analysis of luxury consumption in the United States today. Throughout Luxury Fever, Frank details his theory of "Why Money Fails to Satisfy in an Era of Excess." Specifically, Frank argues that we are often unsatisfied with our own levels of income and consumption precisely because our satisfaction depends upon our relative, rather than absolute, level of income and consumption. Thus, the absolute levels of income that we earn and goods that we consume are not nearly as important to our satisfaction as how these levels of income and consumption measure up relative to the income and consumption levels of others.

In order to increase our satisfaction, we attempt to increase our levels of income and consumption relative to others. According to Frank, this is causing us to work more hours, spend less time with friends and family, and increase our spending on luxury items. Frank highlights the ways in which this competition for relative status can be maladaptive and proposes a solution to remedy this increasingly problematic social issue.

Although Frank suggests that this competitive tendency toward relative consumption is rooted in evolution and inherent in human nature (145), he also maintains that this drive has become maladaptive. If left unrestricted, such a tendency will cause us to continually strive for ever-higher levels of income and conspicuous luxury consumption. And, although such competition for relative status may increase the satisfaction of some individuals (who are successful in moving up relative to others), it will not ultimately be good for the group as a whole. Rather, such competition will merely continue to raise the levels of income and luxury consumption that the entire group must attain to simply maintain their position relative to everyone else. Frank uses the example of several countries in an "arms race" to illustrate this concept (156).

Each country strives to produce new and more effective weapons technology, however often no country is arguably better off in the end since all of countries will likely wind up with comparable weaponry. What may have been a positive development for one individual country is now arguably a negative development for the whole group of countries. In the same way, competition over relative levels of income and luxury spending ultimately causes a conflict between individual and group interests (158), whereby "spending decisions that are adaptive for the individual are maladaptive for society as a whole" (271).

Further, Frank suggests that once we reach a certain standard of living, increases in income or consumption will not result in corresponding increases in life satisfaction (77). Pointing out that we have long since attained this particular standard of living, Frank proposes that if we were all to reduce the amount that we spend on luxury items similarly, we would still experience satisfaction levels similar to those we experience now. Frank suggests that this decrease in consumption of luxury items would free up an enormous amount of money per year, which we could then invest in endeavors that could further increase our life satisfaction. Through a series of thought experiments, Frank illustrates that a variety of things, including longer vacation time, decreased commuting time, and improved public infrastructure, could increase our levels of satisfaction more so than increased income or luxury consumption (92).

Thus, Frank suggests that our resources could be better spent to maximize our collective utility if we spent less on luxury consumption and more on the aforementioned, or other similar, aims.
In order to prompt us to spend less on luxury consumption, Frank proposes a luxury tax that he indicates could "free up trillions of dollars annually" (194). Rather than levying a traditional tax upon select luxury items, Frank suggests a more general consumption tax that would progressively tax individuals based upon how much they consume (purchase) each year (211). According to Frank, such a tax would discourage luxury spending, prompt individuals to save and invest more of their income, and stimulate economic growth (224). He further argues that since a high rate of economic growth is an undeniable "public good, a tax policy should be a reasonable way to promote such growth" (247).

Strengths & Weaknesses

Luxury fever is interesting and thought provoking as a sociological analysis of luxury consumption in the United States today. Frank documents this phenomenon using numerous anecdotes and examples that make Luxury Fever both appealing and fairly easy to read. This could be a good text to use for discussion in an introduction to sociology or inequality course. Other reviews appear to agree upon the value of Luxury Fever in this respect (Andrews, 2000; Gordon, 2000; & McCluskey, 1999).
Despite it's apparent value as a sociological text, the value of Luxury Fever as an economic analysis appears to be more widely contended. Although I did not personally find fault with Frank's economic analysis of, and solution to, the increasing levels of luxury consumption in the U.S., I am admittedly not well versed in economics. Some reviewers with a grasp of economics do seem to find fault with the theoretical underpinnings and practical interpretations of Franks' arguments. For detailed objections, please see (Andrews, 2000; Gordon, 2000; & McCluskey, 1999).

In addition to a possible weakness in Frank's economic arguments, I found that his emphasis upon the social problems and programs he would like to reform, detracted from his more central argument concerning luxury consumption and the how to reduce such consumption. In certain chapters (i.e. chapter 16), Frank wrote on about specific social problems that could potentially be remedied using the money that could be saved by reducing luxury consumption. For instance, Frank comments that "by diverting from conspicuous consumption, we could invest in public infrastructure and the social safety net" (272).

However, this statement assumes that there exists a common value (among the American public) regarding investing in public works and maintaining social welfare programs. Although Frank himself believes in such causes, I do not think it fair to assume that even if we saved money through across the board decreases in luxury consumption, that the money would ultimately be put to such socially responsible aims as these. In this way, I believe that Frank's emphasis upon social problems and programs made his central arguments less clear and consistent and also caused him to project his social and political values upon the American public.

Conclusion

In conclusion, it seems that Frank's Luxury Fever could be a useful analysis of luxury consumption for sociologists, voluntary simplicity proponents, and liberals who would like to reform any of the many social issues that Frank proposes that decreases in luxury consumption could alleviate. This analysis may not, however, be as useful nor as compelling to others who are better versed in economic theory.

References

Andrews, D. (2000). http://www.findarticles.com/p/articles/mi_qa3620/is_200010/ai_n8919783

Gordon, D. (2000). Miscalculating Human Interest. http://www.mises.org/story/384

McCluskey, P. (1999). Review of Robert H. Frank's Luxury Fever. http://www.bayesianinvestor.com/luxury_review.html