Positional goods are ones whose advantages are affected by social factors (notably, whether other people also have them, or not: country cottages, private educations, iPods, cars). They are a major feature of unequal societies. The “positional economy” was first described by Fred Hirsch in “Social Limits to Growth” (Routledge, 1977) and the concept was used more recently by Robert Frank in “Falling Behind: how rising inequality harms the middle class” (2007).

This piece in the New York Times of 24th April (also included in The Observer’s NYT supplement, 4th May 2008) gives a very vivid illustration of their impact in China:

Published: April 24, 2008
With First Car, a New Life in China

Bradsher explains that family cars have become essential for improving your sons’ marriage chances (and thence the possibility of having grandchildren). But “When [the father of the family he talked to] courted his wife in the early 1980s, he needed only a bicycle.”

Bradsher’s article ends with the tragic news that:

In two weeks, he will go to a leading hospital in Shanghai for more surgery, a five-hour drive to the north, followed by two more rounds of chemotherapy. But he will not be going in the family car: he sold it for nearly $8,000 last year to help cover his medical expenses.

It is a common occurrence in this country, nominally communist, but with little or no safety net. While many families are scrambling into the middle class and buying cars, others are falling out of the middle class because of business reversals, medical bills or other problems, and are unable to buy replacements for their first car.