What Is Personalized Pricing—and Why Are Lawmakers Scrambling to Ban It?

Companies already track your every move online. Some researchers say it is only a matter of time until retailers start using that data to set prices just for you.

By Jackie Snow of The WSJ.

The print edition titled this article "How to Prevent Personalized Pricing." This sounds like a form of price discrimination, which I will explain a bit after excerpts. This is not necessarily a bad thing. I will get into that later as well. And as the article mentions, sometimes this personal pricing can get you a lower price (see some text highlighted in red).

Excerpts:

"what if the price you get is set for you alone—a measure of what the retailer thinks you’ll pay based on the data it has about you"

"Dynamic pricing, where the same fare or rate shifts for everyone based on supply and demand, also has become common across industries, including airfares and ride-shares."

"retailers could use personal data to set a higher base price for individual consumers, without their knowledge, when algorithms detect things like urgent need (like business travelers who need to fly somewhere right away as I explain below) or high disposable income." 

"companies now have access to much more detailed profiles of customers based on information drawn from across the Web, and pricing algorithms make it easier to adjust prices for individuals based on that data."

"In early 2025, the Federal Trade Commission . . . determined that companies were selling pricing and consumer-data tools to help retailers across various industries set individualized prices"

"Pricing based on ZIP Code, for instance, often correlates with race. What’s more, there are increased privacy and cybersecurity risks when businesses share a lot of customer data drawn from various sources across companies and platforms."

"Maryland in April became the first state to ban food retailers and delivery services from using personal data to set higher prices.

In New York, a law took effect in November 2025 requiring companies to disclose when they use personal data to set prices. State legislators are now pushing to go further, introducing two new bills that would ban the practice outright while preserving loyalty programs and coupons, as well as discounts for veterans and seniors."

"experts suggest a few steps worth trying, especially for big purchases.

—Compare prices across devices or browsers before committing. The differences may be small but it takes minutes and is worth the check.

Use incognito or private browsing mode, which prevents cookies from persisting between sessions and makes it harder for sites to recognize you as a returning visitor"

"Use aggregator sites like Google Flights or Kayak before going directly to a company’s own platform. Searching through an aggregator avoids triggering demand signals on a single site"

"personalized pricing cuts both ways. The same tools that can be used to charge you more when you seem desperate also can be used to offer you a discount when you seem hesitant. 

"If it knows you are a price-sensitive (meaning more elastic demand than average) shopper who compares across sites, it may offer you a better deal" 

Price discrimination is when a business charges different prices to different consumers who have different elasticities of demand (or responsiveness to price changes). If you spend a small share of your income on a good, your demand will be inelastic and if price goes up, quantity demanded will not fall very much.

If you have a short time horizon, like a business traveler, your demand is inelastic and you will get charged a higher price. 

Investopedia has a good article on Price discrimination by Melissa Horton. There are three degrees of price discrimination. This personalized pricing is an example of the first degree case. It says

"this strategy occurs when businesses can accurately determine what each customer will pay for a specific product or service and then sell it for that price." 

Price discrimination is not necessarily a bad thing. Firms that use it increase profits. I show this with a graphical and mathematical example at an earlier post of mine called FTC to Examine if Companies Raise Prices Using Consumer Surveillance. This also shows that quantity is higher when the firm price discriminates, which gets mentioned below as welfare enhancing. Customers with low elasticity will tend to get higher prices than those with high elasticity. My example has two graphs with demand lines that each have a different elasticity of demand.

Here are some examples of how price discrimination can be good:

See A Love Letter to Tyler Cowen by David Henderson. 

"The web has also, notes [Tyler] Cowen, facilitated price discrimination, which typically gives low prices to people with low time values. Since time values and income are highly positively correlated, price discrimination “is usually an egalitarian development.”"  

This happens when leisure travelers have more time to shop around than business travelers, so they have a higher elasticity of demand and they get a lower price. A business traveler who is told by their boss to fly to another city tomorrow does not have much time to shop around. So the airlines know that anyone who is wanting a ticket for flight tomorrow has low elasticity and will get a higher price. 

Also see Price Discrimination by Tejvan Pettinger. A key passage is:

"Price discrimination will enable some firms to stay in business who otherwise would have made a loss. For example price discrimination is important for train companies who offer different prices for peak and off-peak. Without price discrimination, they may go out of business or be unable to provide off-peak services."

Then see See Progressive taxation as price discimination.Tyler Cowen said:

"The point of price discrimination is to sell more goods and services while taking in more profit; the low demanders can pay a lower price, yet the company still sells for a higher price to the high demanders.  If output goes up, social welfare usually does too."

These Americans Are Scrimping to Save Their Summer Vacations

More expensive food, tickets and fuel prompt some families to rethink their plans; ‘everybody has a breaking point’

By Katherine Hamilton of The WSJ. 

I have done several posts on how people have been dealing with the inflation of the last few years as well as how they have been affected. Links to those posts are listed after some excerpts from the article.  Many of the things consumers are doing involve more time and effort doing things they would not normally do. This is one of the costs of inflation, what we have to do to avoid it or mitigate it.

Excerpts:

"This season’s shrinking vacation marks a shift for many Americans, who for years have refused to let inflation and tariffs dampen their travel plans, said Geoff Freeman, chief executive of the U.S. Travel Association. 

“Everyone has a breaking point,” he said. “We’re seeing that with some travelers today.”

Airlines and cruise companies have raised fares to offset surging fuel costs related to the Iran war, though gasoline prices have come down by nearly $1 a gallon in recent weeks, according to AAA. 

Rising costs have prompted 52% of U.S. workers to stay home more this summer, according to a poll of more than 1,000 Americans conducted by Monster, the job platform. For that half of the population, staycations are a way to save on dining out, entertainment and driving, the survey showed.

"More people now say they are willing to forgo an airfare or hotel purchase because the costs are too high, the survey showed."

"All-inclusive deals are one of the main ways travelers on tight budgets are managing to travel internationally, said Shenika Baisley-Woodley, the owner of Divine Dream Destinations Travel. She said she has stopped recommending St. Lucia and St. Martin to many customers, because their resorts have fewer package deals and often don’t include airfare."

"Travelers are turning to advisers more for help finding deals and making their dollar stretch, too. Rather than coming to her with a destination in mind, many of Baisley-Woodley’s clients give her a budget and ask where they can afford to go. She often suggests a cruise because they can include meals and sometimes excursions in one price."

"A lot of travelers are waiting to make last-minute decisions, because of the uncertainty around prices"

Related posts:

New products, smaller packages and value meals are being rolled out to attract inflation-weary customers (2026) 

Where Americans Are Drawing the Line on Price Increases: Shoppers are buying less where prices are rising fastest, showing that inflation isn’t being driven by demand but by companies passing on costs (2026) 

The 2025 Inflation Numbers Are Finally In. Here’s the Good and Bad News: Gasoline prices are down, but rising grocery costs continue to weigh on consumers (2026) 

The Middle Class Is Buckling Under Almost Five Years of Persistent Inflation: Workers growing tired of economy in which everything seems to get more expensive (2025) 

The Lengths Americans Are Willing to Go to Make Every Penny Count: From buying half a cow to watering down soap, people are experimenting with frugality—and it is affecting sales at consumer companies (2025) 

Are you hurting the economy if you bring your lunch to work? (2025)

More people are bringing their lunch to work because restaurant meals have been going up in price. Again, more tasks that people are performing to avoid inflation 

Inflation Has Cooled, but Americans Are Still Seething Over Prices: Many people—though not all—saw wage increases that kept pace with the pandemic’s rapid price hikes, but the psychological toll remains (2024)

Child Care, Rent, Insurance: Where Inflation Hits Hardest Now (2024)

Why do workers dislike inflation? (2024) 

"workers must take costly actions (“conflict”) to have nominal wages catch up with inflation" They have to bargain with or fight their employers to get a wage increase to match inflation.

Inflation Usually Hits Harder for Poor Families. For a Couple of Years, It Didn’t. New research on how inflation varies between the poor, middle class and rich paints a different picture of poverty and inequality (2024)

The Haves and Have-Nots at the Center of America’s Inflation Fight: There’s a growing gap between Americans who are battered by high inflation and interest rates and those who are actually benefiting (2024)

An Increase in Uninsured Drivers Is Pushing Up Costs for Everyone Else (2024) 

Inflation has caused consumers to choose what they need to cut back on (insurance)

Costco and Sam’s Club Aisles Are Full of Gen Z Shoppers (2024)

Consumers are buying in bulk to save money by getting a lower per unit price

Inflation is mentally taxing (2024)

Inflation is mentally taxing. Dealing with a straitened budget exacts a psychological toll as well as a financial one

Store Brands Are Filling Up More of Your Shopping Cart (2024) 

People are on the look out for cheaper alternatives due to inflation

Consumers Fed Up With Food Costs Are Ditching Big Brands (2024) 

After years of price increases, food companies say more consumers pull back; fast-food chains and snack makers plan new deals and flavors

Are Americans Worrying Too Much About Inflation? Two opposing views (2024)

The Era of One-Stop Grocery Shopping Is Over (2024)

One thing that I always talked about with inflation was that one of its costs was all the things we had to do to avoid it. Consumers are making 8% more trips to different retailers as inflation continues to upend household budgets. They are going to more stores to find lower prices. But it costs time to do that and probably more money on gas.

When workers were paid twice a day and given half-hour shopping breaks (Germany, 1923) 

By mid-1923 workers were being paid as often as three times a day. Their wives would meet them, take the money and rush to the shops to exchange it for goods. However, by this time, more and more often, shops were empty. Storekeepers could not obtain goods or could not do business fast enough to protect their cash receipts. Farmers refused to bring produce into the city in return for worthless paper. The requirements to calculate and recalculate commercial transactions in the billions and trillions made it practically impossible to do business in paper Marks.

The % of 25-54 year-olds employed was 80.2% in June after being 80.8% in May; Average hours worked was unchanged at 34.3

One weakness of the unemployment rate is that if people drop out of the labor force they cannot be counted as an unemployed person and the unemployment rate goes down. They are no longer actively seeking work and it might be because they are discouraged workers. The lower unemployment rate can be misleading in this case. People dropping out of the labor force might indicate a weak labor market.

We could look at the employment to population ratio instead, since that includes those not in the labor force. But that includes everyone over 16 and that means that senior citizens are in the group but many of them have retired. The more that retire, the lower this ratio would be and that might be misleading. It would not necessarily mean the labor market is weak.

But we have this ratio for people age 25-54 (which also eliminates many college age people who might not be looking for work).

It was 80.6% in Jan. 2020 and 69.6% in April 2020.  Click here to see the BLS data. Here is what it was for each of the last 4 years

2022) 79.883% 

2023) 80.683%

2024) 80.717%

2025) 80.600% (just an 11 month average due to no data for October instead of 12)

 

There have been only 5 months since April 2001 when the % of 25-54 year-olds employed was as high as 80.9%.

The last time before now that it dropped by at least 0.6 was during Covid in 1920. It fell from 80.4% in Feb. 2020 to 79.4% in March and then fell to 69.6% in April. But it started rising after that.

The last time before Covid was in Jan. of 2009. It was 77.6% in Dec. 2008 and fell to 77.0%.

Outside of Covid, the largest one month decline since 1948 is 0.7 which has happened 4 times, the last was in 1960. A 0.6 drop has happened 8 times outside of Covid.

The unemployment rate was 4.2% in June after being 4.3% in May. Click here to go to that data. Here is what it was for each of the last 4 years. 

2022) 3.6%

2023) 3.6%

2024) 4.0%

2025) 4.3%

Labor Force participation fell to 61.548 % from 61.834%. Here is what it was for each of the last 4 years 

 

2022) 62.2%

2023) 62.6%

2024) 62.6%

2025) 62.4%

 

The % of the adult population employed fell to 58.969% from 59.178% (that is people 16 years old and older).  Here is what it was for each of the last 4 years 

 

2022) 60.0%

2023) 60.3%

2024) 60.1%

2025) 59.7%

Here is the timeline graph of the percentage of 25-54 year olds employed since 2016.

Now since 1948.  

 

Now hours worked. This comes from the St. Louis FED. See Average Weekly Hours of All Employees, Total Private. It was 34.3 in June and 34.3 in May. Shaded areas indicate U.S. recessions. 

 

Related posts: 

This one has to do with the difference between two employment surveys. See The economy added 339,000 jobs in May according to the establishment survey but the household survey showed a loss of 310,000 and a rise in the unemployment rate from 2023. 

"The reason for the discrepancy is that there are two surveys. The establishment survey is used for the Labor Department's monthly jobs report. They contact businesses for this survey. The household survey is used to put together the unemployment rate. The Bureau of Labor Statistics contacts households for this one."

See also Comparing employment from the BLS household and payroll surveys from the BLS.

Click here for a good Twitter thread on the jobs report and wages by Harvard professor Jason Furman. 

See U.S. job creation cools in June with payrolls growth of just 57,000; unemployment rate at 4.2% by Jeff Cox of CNBC. 

Average U.S. real income is 46 times higher than it was in 1774

See Happy Birthday, USA economist Jeremy Horpedahl.

"For America’s 250th birthday, my present to all of you is this chart showing our economic history. Average income in the US has increased dramatically since the country was founded. This chart attempts to provide one, continuous series, using the best available income data and inflation adjustments (well, mostly continuous — before 1790 there are just a few estimates). Sources are listed at the bottom of the chart. The y-axis is a log scale." 

 

Related posts:

The World Isn’t Actually Going to Hell in a Handbasket: Human beings have been complaining about a moral decline since, well, forever (2024) 

There is still reason to hope despite the fact that more than three-quarters of Americans say the United States is headed in the wrong direction (2024)

We are privileged to live in an age of medical miracles that increase human welfare (as the share of the world’s people living in extreme poverty has fallen) (2023) 

Why 536 was ‘the worst year to be alive’ (2020) 

The World Is Getting Quietly, Relentlessly Better (2019)

This Has Been the Best Year Ever (2019)

Why 2017 Was the Best Year in Human History (2018)

The short history of global living conditions and why it matters that we know it (2018)

How Much Has Life Expectancy Improved?  (2018)

Some Good Economic News (2013)

Pre-market societies could sometimes have alot of violence

Non-capitalist or pre-capitalist societies can have quite a bit of violence. The first quote comes from The Making of Economic Society, 13e by Robert L. Heilbroner and William Milberg.

"It is difficult for us to reconstruct the violent tenor of much of feudal life, but one investigator has provided a statistic that may serve to make the point: Among the sons of English dukes, 46 percent of those born between 1330 and 1479 died violent deaths. Their life expectancy when violent death was excluded was 31 years; when violent death was included, it was but 24 years."

That came from T. H. Hollingsworth, “A Demographic Study of the British Ducal Families,” Population Studies, XI (1957–58). Imagine if someone told you that 46% of the sons of senators or Fortune 500 CEOs were going to die violently over the next 150 years.

Now there is a study out called "The Better Angels of Their Nature: Declining Violence through Time among Prehispanic Farmers of the Pueblo Southwest", American Antiquity, Volume 79, Number 3 / July 2014. See The Most Violent Era In America Was Before Europeans Arrived. It discusses some periods when native American life was quite violent. Here are some excerpts:

"Writing in the journal American Antiquity, Washington State University archaeologist Tim Kohler and colleagues document how nearly 90 percent of human remains from that period had trauma from blows to either their heads or parts of their arms.

"If we're identifying that much trauma, many were dying a violent death," said Kohler. The study also offers new clues to the mysterious depopulation of the northern Southwest, from a population of about 40,000 people in the mid-1200s to 0 in 30 years."

"It wasn't just violent deaths that poke holes in the harmony with the land and each other myth. A paper in June in the Proceedings of the National Academy of Sciences found that the Southwest also had a baby boom between 500 and 1300 that likely exceeded any population spurt on earth today. The northern Rio Grande also experienced population booms but the central Mesa Verde got more violent while the northern Rio Grande was less so.

Kohler has conjectures on why. Social structures among people in the northern Rio Grande changed so that they identified less with their kin and more with the larger pueblo and specific organizations that span many pueblos, such as medicine societies. The Rio Grande also had more commercial exchanges where craft specialists provided people both in the pueblo, and outsiders, specific things they needed, such as obsidian arrow points.

But in the central Mesa Verde, there was less specialization.

"When you don't have specialization in societies, there's a sense in which everybody is a competitor because everybody is doing the same thing," said Kohler. But with specialization, people are more dependent on each other and more reluctant to do harm."

Related post:

Violence was widespread in early farming society

We Liked Remote Work. Then We Looked at the Data.

By Emma Harrington and Natalia Emanuel. They are labor economists and authors of the forthcoming book “In Person: How Working Together Fuels Creativity, Productivity, and Growth.” Excerpts:

"Despite its advantages, remote work has significantly deepened Americans’ isolation and distress."

"remote work explains a third of the deterioration in mental health between 2011 and 2024."

"Our study compares workers in jobs that could be done remotely, such as finance and software engineering, with workers in jobs that must be done in person. People in remote-capable jobs worked from home three times as often in 2024 as in 2019. As they did, their days became far more solitary. Eighty-four percent of remote workers spend their workday entirely alone. Over half report feeling less connected to their colleagues. Even when communicating online, people working from home receive less feedback from their co-workers and contact fewer people outside their immediate teams."

"These workers did not compensate by socializing more outside work."

"In one study, when commuters were instructed to connect with a stranger near them, they reported being happier than those who continued in silence as usual"

"workers in jobs that can be remote saw steeper increases in distress, mental health visits and prescriptions for antidepressants than other workers did."

"People who lived with their spouse and kids saw their mental health hold fairly steady, while those who lived alone experienced a 20 percent decrease in mental well-being. Overall, we found that the rise of remote work increased distress by 7 percent, which accounts for a third of the total increase over the 13-year period we measured."

"remote work’s costs are subtle and slow. When loneliness sets in gradually, it is natural to blame other life changes"

"Our brains are wired to connect face-to-face, and even the most advanced digital tools are a poor substitute. To maintain this critical source of connection, workers need doses of in-person time with one another."

Also see The effects of remote work on the disability employment gap: A rise in work from home explains most of the post pandemic gain in full-time employment among people with physical disabilities by Tyler Smith. He summarizes work by Nicholas Bloom, Gordon B. Dahl, and Dan-Olof Rooth.

There were also some interesting letters to the NY Times about the Harrington and Emanuel article. See Must We Really Come Into the Office?

Related posts:

Want a Promotion? Try to Not Be So Remote 

Can America’s Cities Make a Post-Pandemic Comeback? (interview with Glaeser)

Companies Start to Think Remote Work Isn’t So Great After All

Since people feel more disorganized and chaotic when they are at home, should business leaders take this into account when they consider whether to make remote working the norm after the pandemic subsides?

Remote work is surprisingly productive (for now, but what about in the long-run?)  

Does a Raise or Remote Work Sound Better?  

With No Commute, Americans Simply Worked More During Coronavirus  

Work Flexibility, Popular With Employees, Is Hardly a Holy Grail  

Remote Work Is the New Signing Bonus

Is there a chip shortage?

A shortage is when the quantity demanded is greater than the quantity supplied and the price is below equilibrium. It does not simply mean that the equilibrium quantity demanded is lower than it used to be or that past customers are not able to buy as much as they had been at a price that was lower than what it is now.

This looks like price has gone up for chips because demand has increased due to AI companies entering the market. I explain below with a graph.

See The Memory-Chip Crisis Is Here—and You’re Footing the Bill: Prices are rising on smartphones, game consoles, laptops and more by Robbie Whelan of The WSJ (Appeared in the June 22, 2026, print edition as 'Shortage Of Chips Drives Up Prices of Devices'.). Excerpts:

"Want a sleek new Microsoft Surface Pro laptop? The latest models start at $1,599, or $600 more than the previous generation, the PC maker said this past week."

"From smartphones to the Sony PS5 Pro (which rose in price to $900 from $750 in April) to PCs, buyers of consumer electronics are getting hit."

"The primary driver is the skyrocketing cost of memory and storage chips"

"These chips are the same ones craved by artificial-intelligence companies"

So the demand for chips has increased. That does not mean that we have a shortage. This graph illustrates what has happened followed by my explanation. 

 

Suppose the black line is the first demand line. P and Q are both 10. But then AI companies enter the market, shifting the demand line to the right by 4 because they buy 4 chips (or maybe 4 million). The equilibrium quantity only rises from 10 (million) to 12 (million). If the AI companies buy 4 million chips that leaves only 8 million for the customers who were in the market before. 

This might seem like a shortage to them because they are getting fewer chips than they used to and the price is higher. But we have price where supply and demand intersect (P= 12) and quantity demanded equals quantity supplied. 

Also notice that before the demand increase at a price of 12 quantity demanded would have been 8, exactly what the pre-existing customers are now getting. Disappointing for them, but they are being outbid by the AI companies. 

Related posts on supply and demand and shortages:

Is There An Aluminum Shortage? (2026) 

Is There A Memory-Chip Shortage? (2026) 

Is there a mechanic shortage? (2026)

Does Boeing face a shortage of a temperature-regulating part? (2024) 

Drug Shortages in America Reach a Record High (2024)

Is There A Booze Shortage? (2022)

Car makers face ‘chipageddon’ (2021)  

Does the U.S. have a firefighter shortage (2021) 

There is no truck driver shortage in the US (2021)

Chicken Shortage Sends Prices Soaring, and Restaurants Can’t Keep Up (2021)

Is there a shortage of homes? (2020)

What Chocolate Shortage? Cocoa Prices Steady as Record Output Projected (2019)

Is there really a shortage of construction workers (2019) 

Was there really a shortage of meatless burgers? (2019)  

Is There A Christmas Tree Shortage? (2017)  

Is There Really A Honey Bee Shortage? (2013)

Will There Be A Pumpkin Shortage This Year? (2011)

Students Are Using a ‘Backdoor’ to Attend Their Dream Schools

High-school grads move to college towns, enroll in online programs and build social life outside regular admissions route

By Roshan Fernandez of The WSJ. 

The links to related posts below are all about the extreme measures and costs that students and their families are willing to incur to get into the college of their choice. So it is interesting that now there might be a lower cost option.

Excerpts:

"Students who don’t get into major public flagships the traditional way are still participating in the social life of these campuses. The small-but-mighty group is moving to college towns, enrolling in online programs or nearby community colleges, living in private housing, joining Greek life, and attending game-day tailgates."

"The programs can be a savvy way for universities to protect their rankings and generate revenue, said Adam Nguyen, founder of admissions-consulting firm Ivy Link. These are often students who narrowly missed the admissions cutoff."

"Some schools dispute that characterization. The goal of the University of Illinois Urbana-Champaign’s dual-enrollment program with a nearby community college is to provide affordability for students and smooth an otherwise complex transfer process, administrators said."

"Justin Helman didn’t get his dream acceptance from the University of Florida. But that isn’t stopping him from pursuing the classic college experience there.

The recent high-school graduate from Park Ridge, N.J., is set to move into a private apartment right by campus. He is enrolling in a UF online program for the first few semesters and paying an extra fee package to access services like the campus gym and student-section football-game tickets. He plans to study at the library, join clubs and might rush a fraternity." 

Related posts:

For College Applicants, Pressure to Make Summers Count Has Gotten Even Worse: Teens scramble to specialize their summer pursuits early—to convey a ‘story’ to college admissions officers (2026) 

The Guru Who Says He Can Get Your 11-Year-Old Into Harvard (big lesson: Optimize childhood ): Jamie Beaton’s Crimson Education offers a pricey, yearslong boot camp preparing kids to apply to the Ivy League. Parents, and Wall Street, are on board (2024) 

"Independent education consultants" help high school students and their parents navigate the competitive college-admissions process (creative destruction and how the economy just keeps creating new types of occupations & professions) (2024) 

Students: Make a mistake on purpose, its good for you! (2007) 

This may sound surprising, but counselors advocate making a mistake on your college applications like an intentional typo. This makes you seem more "authentic." Too often all students look slick and identical. They got good grades, test scores, were on teams, did volunteer work, etc., all with the idea of getting into college. But is that who you really are if you do it just to impress the college? That is why counselors suggest making mistakes. Then your application makes you seem like a more real person, not too good to be true. Of course, colleges project an image, too with their pictures of the nicest parts of the campus and groups of smiling students in their catalogues to make you want to go their. Seems like everyone is trying to impress everyone else with an image.

Is knowledge of fashion history a new status symbol?

See Is the Luxury Handbag’s Heyday Ending? An $8 billion slide in sales shows attitudes toward designer bags are changing by Carol Ryan of The WSJ.  

I have several links below on what Thorstein Veblen called Conspicuous Consumption. That is when rich people "purchase goods and services to display one’s economic power and social status." Adam Smith also said something like this. 

But now knowledge of fashion history might be a more powerful status symbol. See the text in red in the excerpts below:

"Status symbols are an odd thing. Some purchases, like a mansion, have never lost their power to flaunt wealth. Pineapples—which were once so rare and expensive that they became the 17th century’s equivalent of the Birkin—fell out of fashion as soon as rising supply meant the middle classes could afford them too."

"Sales of luxury bags are down almost 10% from peaks seen in 2023"

"brands raised prices too aggressively during the pandemic"

"Luxury companies released 80% fewer new bags between 2023 and 2025 than they did between 2016 and 2019"

"Social-media feeds are flooded with images of once-scarce bags like the Hermès Birkin and the Chanel Classic Flap, which has killed some of the magic."

"“You are selling the promise of exclusivity. Anything that creates visibility is not necessarily good,” says Luca Solca, luxury goods analyst at Bernstein."

"shoppers are still obsessed with luxury handbags, but their tastes are evolving in ways that are unhelpful for luxury companies’ profits."

"Social-media content about affordable ways to access luxury handbags through resale and rental platforms like Vivrelle is up sharply"

"carrying a vintage luxury bag is becoming cooler than buying new. In May, searches for vintage bags were up 131% compared with the same month of 2025" 

"Vintage is gaining popularity because of growing disenchantment with modern, mass-produced luxury, according to Silvia Bellezza, an associate professor of marketing at Columbia Business School." 

"buying vintage is a way to look different in an era of algorithm-driven fashion trends. Buying vintage also requires knowledge of fashion history, which is emerging as a new status symbol itself."

Also see Veblen Goods by Andrew Loo of CFI (Corporate Finance Institute) . Excerpts:

"Veblen good is a type of luxury good named after American economist Thorstein Veblen. It shows a positive relationship between price and demand [it should say quantity demanded-CM], and thus an upward-sloping demand curve.

The demand [it should say quantity demanded-CM] for a Veblen good rises (drops) when its price increases (decreases). A Veblen good generally is considered a high-quality exclusive product and a status symbol. When the price goes higher, its status symbol makes the Veblen good more desirable to consumers with high social and economic standing. Some common examples of Veblen goods include luxury cars, wines, handbags, fine jewelry and watches and even sneakers."

"Conspicuous consumption is another relevant concept of Veblen goods. It represents the purchase of goods and services to display one’s economic power and social status, motivated by the desire for prestige.

The concept of conspicuous consumption was also identified by Thorstein Veblen in his book The Theory of the Leisure Class (1899). In the practices of conspicuous consumption, a higher price makes a product more desirable for its status symbol, which explains the features of Veblen goods from a sociological perspective."

Adam Smith may have beaten Veblen to the punch. In The Wealth of Nations, he wrote:

"With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eyes is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves. In their eyes the merit of an object which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or by the great labour which it requires to collect any considerable quantity of it, a labour which nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher price than things much more beautiful and useful, but more common." (the entire book is online)

In Veblen's chapter on "Conspicuous Consumption," there is no mention of Adam Smith. 

There is statistical or empircal evidence that supports Veblen's theory. A Ph. D. student found that rich families do spend more on "Conspicuous Consumption." 

See also Doctoral Thesis Says Rich People Spend More on Conspicuous Things. Excerpts:

"Ori Heffetz, a doctoral student in economics at Princeton University (back in 2005-now he is a professor at Cornell University), has developed the first broad-gauged index of product visibility. Sure enough, he finds in his thesis that conspicuous items make up a greater share of the consumption budget in wealthier families."

"Mr. Heffetz estimated the relationship between the amount spent on each of 29 products and a household's income, using data on 3,924 households from the 1997 Consumer Expenditure Survey, conducted by the Bureau of Labor Statistics. The "income elasticity of demand," defined as the percentage change in consumption for a 1 percent increase in income, summarizes the degree to which a good is a luxury or a necessity. A good is a luxury if a 1 percent increase in income is associated with more than a 1 percent increase in consumption of that good.

Mr. Heffetz's analysis indicates that the higher the visibility of a good, the more likely it is to be a luxury item. For example, spending on cars and jewelry, two highly visible items, rises as a share of a household's budget as its income rises, while spending on home utilities, an inconspicuous category, falls as a share of the budget as income rises."

Related posts:

Is there InConspicuous Consumption? (2025) (what if rich people spend their money and they don't want to be seen doing it)

Is there InConspicuous Consumption? (Part 2) (2025) (links to some research on this concept)

What if you had to spend alot of money just to be offered the chance buy a luxury item? (2025) 

Has Luxury Lost Its Shine? Customers are complaining that they are getting less bang for their buck at the luxury store (a case of Veblen goods) (2024)  

Is Starbucks coffee no longer a Veblen good? (2024)

China's Government Cracks Down On Displays Of Wealth On Social Media (2022)  

(See In China, Bragging About Your Wealth Can Get You Censored: Online posts by users showing off their receipts, over-ordering food or scattering money have been deemed vulgar. Regulators say such content leads young people astray by Vivian Wang and Joy Dong of The New York Times.)

Payless sold its discount shoes for $600 a pair at mock luxury influencer event (2018)

Federal Reserve Economists May Have Discovered Another Cause Of Bankruptcy (if a neighbor wins the lottery people start spending more on consumption to keep up) (2016)

Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)

Have market forces eroded Apple's monopsony power for chips?

To see how monopsony works graphically, see the Wikipedia article. Monopsony means one buyer (whereas monopoly means one seller). Similar to what happens in monopoly where the price is higher than in competition and the quantity produced is lower, in monopsony less is produced and sellers get a lower price because the one buyer has market power.

And that is something that Apple has been accused of. See Apple Is America’s Semiconductor Problem. Excerpt:

"Apple’s sheer size as a buyer puts this into perspective. In 2022, Apple bought $67 billion of semiconductor chips, a full 11% of the global market for chips across all industries. Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones profits. Apple’s supply agreements with U.S. mobile operators demand that Apple products get the deepest subsidies and the largest share of sales."

But the recent increase in demand for chips for AI purposes means that there are many more buyers and it looks like Apple's influence is decreasing. See Apple to Raise Prices Due to Memory Chip Crunch, Tim Cook Says: The CEO tells the Journal in an exclusive interview that soaring costs make price increases ‘unavoidable’ by Rolfe Winkler of The WSJ. Excerpts:

"Apple plans to raise prices on its products to offset the surging costs of memory and storage chips, Chief Executive Tim Cook said"

"“There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” said Cook. “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”" (there is less supply for Apple)

"Memory companies are building more factories: Morgan Stanley forecasts that production capacity for DRAM wafers, the silicon discs on which chips are patterned, will grow 30% by 2027. Yet as suppliers prioritize the specialized AI memory, wafers for consumer tech will fall up to 15% short of demand, Morgan Stanley estimates." (so if there is more demand now with more buyers more will be produced meaning the monopsony power is being reduced)

"Companies that make PCs, game consoles, smartphones and more have raised prices"

"Morgan Stanley estimates a 15% bump for prices of smartphones and PCs in the U.S. this year."

"It is unclear how Apple could match, let alone beat, the deal terms that AI hyperscalers are offering to lock up supply. Those companies are signing three-to-five year agreements with huge cash prepayments that Apple is unlikely willing to match"

"Historically it has used its heft to wring the lowest prices out of suppliers, playing them off each other and leaving them little profit. As AI companies have stormed into the market, suddenly Apple has to wait in line." 

This last passage shows that Apple had some monopsony power that is decreasing since they used to be able to play suppliers off each other with little profit (meaning a low price as monopsony predicts) but now they have to wait in line because there are more buyers they have to compete with.