Network Externalities: Mom Jeans, Man Buns, and the Snob Effect

Seattle boasts a thriving hipster culture. Its music venues, coffee shops, and small businesses provide alternatives to large-scale corporations. Hipsters generally reject mainstream culture in favor for the “underground”: small, up and coming businesses, musicians, and trends that have yet to gain considerable traction.

This behavior is explained by network externalities, or additional effects on the utilities of goods that rely on the number of consumers. Network externalities can be both positive (bandwagon effect) and negative (snob effect). In the bandwagon effect, as the quantity of consumers increases, one’s utility increases. This effect appears when someone wants to fit in with a trend, and as the trend grows increasingly popular, the consumer gains utility. The snob effect acts in the opposite. As the quantity of consumers increases, a consumer values the good less.

The snob effect commonly applies to goods such as luxury cars, collectors’ items, and rare art, but hipster culture has expanded the effect further. Goods considered mainstream lose value, so as popular trends evolve, hipster trends do so in parallel. Music, fashion, literature, and even food trends are subject to decreases in popularity if deemed too mainstream. Seattle exhibits the results of the snob effect in its farmers markets, small shops, and new locally owned restaurants. Additionally, various music venues cater to hipster culture by featuring alternative bands, such as Chop Suey, Neptune, and my personal favorite, the Crocodile.

While the term “snob” may connote expensive and rare goods, the effect itself applies to any good or service that decreases in value as the quantity of consumers rises. The rise in hipster culture, especially in the greater Seattle area, promises a surge in the snob effect and a rising counter-culture.

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