Abstract
Novel goods and ideas are introduced to today’s consumers with increasing frequency. This phenomenon is perhaps most notable in the apparel industry, which in recent decades has seen the rise of “fast fashion” and an accelerating rate of novel style introductions from semi-annual to semi-weekly. In this paper I study the potential for this type of accelerating novelty to have a negative impact on consumer well-being. I analyze a simple theoretical model of consumer behavior in which consumers with a preference for novelty decide how fast to replace their fashion goods before and after an innovation which accelerates the rate at which new goods become available. In the basic model, where consumers update their goods based on their intrinsic preference for novelty, the novelty-accelerating innovation is not welfare-decreasing. However, when the model is extended in realistic ways, I find that there are at least three conditions under which the innovation may decrease welfare by increasing the extent of sub-optimal replacement: if there are external costs of updating to a newer good; if the consumers are boundedly rational and exhibit present bias; or if consumers’ replacement decisions reflect an arms race for social status. My results in these model extensions provide an economic foundation for rising popular concern about undesirable social effects of “fast fashion.” I also discuss the implications of these results for future patterns of consumption, which are likely to reflect still more accelerated novelty and possibly the expansion of fashion behavior to a broader range of consumption settings.
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Notes
This working definition of “fashion” is similar to many others. For Pesendorfer (1995), fashion is “the opaque process that identifies certain designs, products, or social behaviors as ‘in’ for a limited period and which replaces them with infallible regularity by new designs, new products, and new forms of social behavior.” For Chai et al. (2007), it is “the tendency or behavioral norm of actors to adopt certain types or styles of customs or commodities nearly simultaneously, only to adopt a different type or style of custom or commodity in future periods.” Sproles (1981)) defines fashion in terms of social norm: “a way of behaving that is temporarily adopted by a discernible proportion of members of a social group because that chosen behavior is perceived to be socially appropriate for the time and situation.” Although the assumption that fashion changes do not involve functional changes is a common one, it is not universal. For example, Stigler and Becker (1977) claim that new styles which gain popularity are often superior to old styles. However, this implies that new fashions can actually have functional advantages, which is not the case considered here, and arguably not a reasonable assumption for many observed style changes in apparel. For example, neither bell-bottomed jeans, taper-cut jeans, nor baggy jeans offer intrinsic superiority.
The legal analysis of Hemphill and Suk (2009) strongly favors this approach, as it pre-supposes the value of innovation. Following standard practice, they assume that “if consumers are prepared to pay for fashion in its various forms, regulation ought to be set to promote innovation and allow consumers a variety of options… Our view that innovation in fashion is socially desirable rests on assumptions that are shared with the assumption that in general the creation of new novels and new songs is socially desirable” (p.116).
I assume that no consumer learning is necessary for new styles to be consumed, and consumers can costlessly switch to using a new style. This assumption is justified by style changes being functionally neutral. Issues of consumption routines and time constraints, as studied in Metcalfe (2001), are not modeled.
I am grateful to an anonymous reviewer for raising this possibility.
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This paper was previously circulated with the title, “Innovation and welfare in markets for fashion goods.” I am grateful to participants at the 15th Conference of the International Joseph Alois Schumpeter Society (ISS) for helpful feedback. I especially thank Zakaria Babutsidze, Andreas Chai, and two anonymous referees for their insights.
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Cooper, K.B. Consumer well-being in a future of accelerating novelty. J Evol Econ 27, 315–335 (2017). https://doi.org/10.1007/s00191-015-0420-x
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DOI: https://doi.org/10.1007/s00191-015-0420-x