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Odd things rich people are buying to show off their wealth

Business Insider logo Business Insider 5/13/2019 Hillary Hoffower

Nothing displays wealth like buying things that don't have a function.

In fact, afunctionality helps explain what makes certain things status symbols, according to Jonah Berger, a marketing professor at the Wharton School of the University of Pennsylvania and the author of "Invisible Influence: The Hidden Forces That Shape Behavior."

Berger cites two examples in his book: A $300,000 Romain Jerome watch that told time only by indicating whether it was day or night, which sold out within two days of its launch, and fixed-gear bikes with no brakes, which are popular in hilly San Francisco.

"By reducing, or removing, functional benefits, fixed-gear bikes and watches that don't tell time become great signals of identity," he wrote. "Most people buy these products for their functional benefits, so something that explicitly forgoes those benefits sends a clear identity signal."

He added: "Even a kid can ride a ten-speed bike, but it takes skill to ride a bike with only one gear. Anyone can buy a watch that tells time, but it takes someone with a strong sense of self (and another way to figure out what time it is) to wear a watch that doesn't."

According to Berger, afunctionality induces a cost or barrier to entry, but it's not the only cost to do so.

Certain costs create and maintain status symbols

Apart from afunctionality, there are four other costs that can propel something into a status symbol, Berger said: Monetary costs, like the money it takes to buy a yacht; costs of time, like time spent learning about wine; opportunity costs, like having an eyebrow piercing that makes it hard to get an office job; and the costs of pain and dedication, like doing hundreds of sit-ups to get six-pack abs.

These costs, Berger wrote, reduce the likelihood of widespread adoption, but they also have benefits.

"They distinguish between insiders and imitators," he said. "Between people who know or care about a particular domain and people who don't. You can't just hop on a fixie one day and hope to ride it safely. You have to take the time and effort to learn how to do it right."

But costs also do one other thing - they explain why some signals persist and stick around. The more costly something is, the more likely it is to persist and retain its value as a clear and accurate signal and the less likely it is that outsiders will poach it, Berger said.

"By reducing the likelihood of adoption, costs simultaneously increase a signal's value in distinguishing people who have a certain characteristic from those who don't," he wrote.

In a nutshell, certain costs, which aren't always necessarily related to money, can create and maintain status symbols.

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