Liquid Lifestyles and Business Cycles: An Evolutionary Theory of Fashion

Abstract

This paper revisits the welfare economics of fashion from the standpoint of evolutionary economics. Whilst accepting that fashion-focused consumption may have an element of status-seeking behaviour about it, which may be of questionable value in welfare terms, the paper emphasizes that fashion cycles can help enhance well-being via trickle-down effects as durable fashion goods circulate in second-hand markets. In an uncertain and changing world, choice is an experimental activity whether on is seeking to try novel products or make a novel impression in competing for status. Boundedly rational consumers will sometimes make mistakes but the finite nature of fashions means that both those who made socially approved choices and those who made mistakes are given a fresh chance to prove their status and decision-making capabilities each time a new fashion cycle starts.