The Ladder

Yesterday Robert Frank published, on Slate, the first in a series of essays adapted from his new book, "The Darwin Economy."

The debut piece focuses on the impact of "expenditure cascades" in the US. The argument is, essentially, that as the wealthiest become wealthier they buy more expensive and "nicer" things. Those in the same social circles feel a need to "keep up with the Joneses" and so the less wealthy up the spending to keep pace, and this behavior echoes down the income ladder. Here's Professor Frank in his own words:

The important practical point is that when the rich build bigger, they shift the frame of reference that shapes the demands of the near rich, who travel in the same social circles. Perhaps it’s now the custom in those circles to host your daughter’s wedding reception at home rather than in a hotel or country club. So the near rich feel they too need a house with a ballroom. And when they build bigger, they shift the frame of reference for the group just below them, and so on, all the way down.