The Dependence Effect in Economics - Special Academic Support

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The dependence effect refers to the way peoples wants are hinged on the process by which they are satisfied (Galbraith 159). Galbraith in his book explains the notion of dependence effect, in an attempt to criticize the economic outlook of demand theory that wants do exist on their own. This means that economics proffer that satisfaction is entirely independent of other factors that can be said to create them. He argues that wants become urgent and grows more as they are satisfied. This is a notion that does not go down well with common sense and thus is repugnant to many. This is more so because wants tend to change as they are satisfied. They always exist despite being satisfied, and satisfying one want does not indicate that it will never re-occur or that another will not be developed even more urgent than the purportedly satisfied one. He argues that even with increased affluence wants still exist; ever so urgent and needing satisfaction, such as a local soccer player being conscripted to join major league soccer ends up buying into the new society he finds himself in to fit.

Further to this, he puts across the opinion that as much as we satisfy wants, they should not be the exact reason why we produce. This is because it leads to a cycle where production creates the wants it seeks to satisfy, and if this is the case then the question remains to know whether the solution lies in more production or lesser wants. As such we cannot defend the production using the urgency of wants as the main reason. This is because wants can be frivolous, bizarre, immoral (Galbraith 153) and yet if we push forth to satisfy all of them we might end up in an uncontrollable fix.

Wants, he says, more so of the second class (arising from a need to be at par with the surrounding society, such as with the neighbours), tend to be insatiable. The dynamic nature of society has made it evolve constantly creating new wants for others, that we seek to emulate and rise to their demands. This means that the neighbour, in seeking to satisfy a want, creates a want in a person that should be satisfied (Cole, 65). In the end, while a person is trying to satisfy one want another one is created.

However, the argument has been carried further. Leading modern theorists of consumer behaviour, Professor Duesen~ berry, stated explicitly that peoples principal social goal within any given society is to have a higher standard of living. This has proved to be of considerable significance especially with the theory of consumption as the projection of life takes a different channel whenever the longing for superior goods gets higher (OECD, 105). This in the end automatically creates a profile of experiencing higher expenditure, which in turn is believed to be much stronger than the one seen coming out of the needs made to be satisfied by those overheads (Galbraith, 155). This effectively kicks into oblivion the notion of independent needs. This is because of what society expects of us as we rise economically and also socially. It expects that we own more and more resources. We get the idea of these resources from looking around at what others in a higher class possess and thus aim for the same in the end. This leads to a situation of creating more want from emulation than independently existing want. Wants, in this scenario, act as status symbols for peoples affluence and place in society. Therefore, this reiterates the point that the production of goods creates the wants the goods are supposed to satisfy as we emulate and develop a desire for what others have.

More evidence of linkage between production and want is found in the institution of advertising and salesmanship. Both are used by the producer for creating the want for the yet to be produced and produced goods. This is evidenced more in the budgets for both production and advertising. It should be noted that the competitive manipulation of consumer desire can only be achievable when the intensity of need is not highly felt, and this should be at least on any appreciable scale (Galbraith, 155). Huge budgets are set out for advertising new products essentially to create and push up demand for the existing products. This just reaffirms Galbraiths assertion that wants are dependent on production. He also brings out the idea that the production should actively be through advertising means and other related activities, which will then create the wants it seeks to satisfy. This is not only passively through processes of emulation (Galbraith, 156).

Economists are uneasy with these assertions despite overwhelming evidence, more so, because they believed in independently existing wants. They fail to examine why want has to be created for a product if it already is something that the masses needed. This has been manifested in their general mistrust and dislikes for advertising and all those who work in it. Their failure to succumb to obvious evidence has led to the notion of independently determined wants still surviving, and their (economists) main duty to satisfy these wants (Zuidervaart, 74). Despite this, the obvious cannot be overlooked, and that is that wants can be blended by the overall process of advertising, given meaning by salesmanship, and finally shaped into better forms by the discreet manipulations of the existing producers. This shows that they are not extremely urgent (Galbraith, 158). Only a man who has satisfied his basic needs can be persuaded to take on another want as in this state, one becomes alone and open to persuasion from other outside factors.

He concludes by asserting his position that as society increasingly becomes more able, their wants are continuously made by the very means that seek to satisfy them. The dependence effect is a passive process and, therefore, increased production leads to increased consumption due to emulation (Deirdre, 55). This creates more wants and also producers create want through the use of salesmanship and efficient advertising, and in this case, it means that wants are dependant on the overall production. To realize a higher consumption level, there should be a higher level of wants creation, which is supposed to be necessitated by a higher level of production (Clingbark, Kayser, Linzer, & Rogowski, 100).

His main undoing is on page 160 as he does not make a strong stand for the dependence effect given his strong views on the same. He gives a situation where unless production is based on demand strictly existing then it serves zero utility, but again gives leeway for other goods as the author claims not all goods have no independent consumer demand production cycle.

Work Cited

Cole Straightford. Tourism and Inequality: Problems and Prospects. New York: CABI, 2010, pp 61- 66.

Deirdre McCloskey. Bourgeois Dignity: Why Economics Cant Explain the Modern World. Chicago: University of Chicago Press, 2010, pp 56-80.

Clingbark Eric Chang, Kayser Mark Andreas, Linzer Drew, and Rogowski Ronald. Electoral Systems and the Balance of Consumer Producer Power. Cambridge: Cambridge University Press, 2010, pp 100-106.

Galbraith John Kenneth. The dependence effect, in The Affluent Society. Boston: Riverside Press, 1958, pp. 152-160.

Zuidervaart Lambert. Art in Public: Politics, Economics, and a Democratic Culture. Cambridge: Cambridge University Press, 2010, pp 70-102.

OECD. Tax Policy Studies, Tax Policy Reform and Economic Growth. New York: OECD Publishing, 2010, pp. 102-108.

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