Question

The concept of Snob effect was proposed by

• A. Harvey Leibenstein
• B. Slutsky
• C. Alfred Marshall
• D. None of these

Hint:

To remember this:
- Bandwagon = conformity (join the crowd).
- Snob = exclusivity (stand out from the crowd).
- Veblen = conspicuous consumption (displaying high price/wealth).
All three were conceptualized by Harvey Leibenstein in 1950.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
In microeconomics, consumer demand is influenced not only by price and functional utility, but also by social factors and the consumption behaviors of others.
These social influences create non-functional demand, which was first systematically classified and analyzed in modern economic literature.

Step 2: Detailed Explanation:
The concept of the Snob effect was proposed by the economist Harvey Leibenstein in his landmark 1950 paper titled "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand".
Leibenstein defined three specific social influences on consumer demand:
1. Bandwagon Effect:
This is the desire to consume a good because others are consuming it, creating a desire to conform or fit in with a group.
This makes the demand curve more elastic.
2. Snob Effect:
This is the desire to own unique or exclusive goods to stand out from the crowd.
As a good becomes more popular and widely consumed by the general public, the "snob" consumer's demand for it decreases.
The snob seeks scarcity and prestige, so their demand is negatively correlated with the consumption of others.
3. Veblen Effect:
This refers to conspicuous consumption, where consumers purchase expensive goods to display wealth and social status.
Unlike the snob effect (which depends on how many other people consume the good), the Veblen effect depends primarily on the price of the good.
Since Harvey Leibenstein proposed all three concepts, Option A is correct.

Step 3: Final Answer:
The concept of the Snob effect was proposed by Harvey Leibenstein.
Therefore, the correct option is (A).