Judging What We Don’t Know: The Intangible Value of Status Symbols
Where I used to work, at a school in a poor neighborhood of Washington, they called the first of every month “Mother’s Day.” In D.C., at that time, the turning of a calendar page also marked the issuance of TANF checks. We pronounced it TAN-iff, as though it was a real word, but technically, it stands for Temporary Assistance to Needy Families. In other words, it’s welfare.
A few of the women who received TANF checks would immediately take the money and go on shopping “sprees,” if you can call spending a hundred bucks on kids’ shoes at Foot Locker and then getting a manicure a spree. I can still see the moms coming in, loaded down with bags, and hear the teachers’ aides muttering darkly behind me: “That money be gone soon enough.” And it was. Almost always, it was.
None of these people—not the judges, not the judged—were strangers to the slow, grinding urban poverty that wore away at the lives of my students and their families. I, however, was. So I usually recused myself from these discussions. Because from my perspective, as a college-educated, upper-middle class, 24-year-old professional, yes it seemed like a terrible idea to buy athletic jerseys and new purses instead of food or books. But I felt then, as I do now, that I wasn’t in a good position to make that call. I had no idea what these women went through every day. How was I to know what a new purse, with its bright colors and unstained exterior, was worth to them?
As it happens, this quantity—how much something like a purse is really worth, both in terms of price and in terms of returns to the user—has an economic name: intangible value. It’s a fairly old concept, first named in Thorstein Veblen’s 1908 article “On the Nature of Capital.” And it would seem to be pretty intuitive: Some things that we value are things, like a piece of leather or a hunk of cheese, that we can touch. Some, like brand recognition or praise from a stranger, are not. But when we fail to acknowledge that other people’s intangible values—we’ll call these “exchange rates”—may differ from ours, ugly things often happen.
Over at the Hairpin, Jia Tolentino has already pointed readers to Tressie McMillan Cottom’s excellent piece on the recent racial profiling incidents at Barney’s New York, “The Logic of Stupid Poor People.” In that essay, Cottom outlines the idea of intangible value without explicitly naming it:
Why do poor people make stupid, illogical decisions to buy status symbols? For the same reason all but only the most wealthy buy status symbols, I suppose. We want to belong. And, not just for the psychic rewards, but belonging to one group at the right time can mean the difference between unemployment and employment, a good job as opposed to a bad job, housing or a shelter, and so on…
You have no idea what you would do if you were poor until you are poor. And not intermittently poor or formerly not-poor, but born poor, expected to be poor and treated by bureaucracies, gatekeepers and well-meaning respectability authorities as inherently poor. Then, and only then, will you understand the relative value of a ridiculous status symbol to someone who intuits that they cannot afford to not have it.
In a sense, I’m focusing on the economic aspects of her argument as a way of code-switching. Cottom’s piece touches on the idea of investment and return, but given its focus on “empathy” and “societal barriers” in addition to behavioral economics, it might not be explicit enough for a person who is busy criticizing the wasteful spending habits of a person who buys a $2,000 handbag. So let’s add to the quantitative side of this argument.
One of the neat things about intangible value is that it can often be converted into a monetary amount—otherwise known as cold, hard cash. This is where every venture capitalist’s favorite phrase, “return on investment,” comes from. It’s why corporations donate to charities. In fact, let’s use that as a rough example.
We’ll imagine that a company that sells something lots of people need—say, car insurance—decides to sponsor a yearly national athletic tournament for special-needs children. This might be something that the company’s executives genuinely love doing. However, this is a company, with stakeholders, and it’s not supposed to lose more money than it makes. How can they decide if it’s worth it to sponsor this?
There are a few approaches they could take, which I will now proceed to oversimplify for the purposes of illustration. They can, for example, survey existing customers and ask if the charity work had any impact on their choice of car insurance company. Or they could go to areas where brand awareness is low, measure that awareness before and after the event, and track awareness against consumer trends in the area in order to see if there’s any correlation. They might, in the course of these analyses, determine that sponsorship of the event results in a temporary financial loss, but that the increase in customers that results from an improved reputation ultimately balances it out. And then they might decide to sponsor it again the next year.
The calculations I just described are made up, of course, but those types of equations certainly exist—it’s just that they vary based on the entity and the context. If you’re not intimately familiar with the affairs of another company, or person, it’s difficult to make a definitive statement on this kind of intangible RoI for someone else. But that doesn’t mean that those returns aren’t real.
Which brings us, of course, back to the purse and belt buyers at Barney’s. If you, like Errol Louis, have trouble comprehending the logic behind a “not-filthy-rich” person buying a $2,500 purse because you would never want that yourself, I’ll put it into language you can understand. Maybe that belt, by its very price tag, provides a boost of self-esteem that manifests itself in improved academic or professional performance, which in turn yields higher long-term returns in the form of scholarships or salary. Maybe the purse was bought by someone who once had nothing, and it serves as a tangible repudiation of that past that allows her to keep moving forward into a successful career. Maybe these purchases were made with gift cards, and the condition for receiving future gift cards was that all of the money had to be spent on one item. I don’t know. But the point is, neither do you.
And so, from both a qualitative and a quantitative perspective, it’s not a particularly useful exercise to sit around wondering if other people are converting value correctly. The good people at Barney’s assumed that a customer who was black, if they actually had money, wouldn’t choose to invest that money in expensive accessories. The folks who tut-tut on the sidelines assume that these same customers are making ill-informed decisions, instead of considering the possibility that they themselves might be missing some information.
None of this is to say that people don’t make stupid financial decisions, because they do. But it’s also to say that what looks like stupid to one person isn’t always that simple. And that, as much as I might have liked to opine on Mother’s Day, I wasn’t at home with them for the rest of the month. Which means that, both as a former economics student and as a human being, it wasn’t my place to judge the celebration.