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Revisiting KeynesEconomic Possibilities for Our Grandchildren$
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Lorenzo Pecchi and Gustavo Piga

Print publication date: 2008

Print ISBN-13: 9780262162494

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262162494.001.0001

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Context Is More Important Than Keynes Realized

Context Is More Important Than Keynes Realized

Chapter:
(p.143) 10 Context Is More Important Than Keynes Realized
Source:
Revisiting Keynes
Author(s):

Robert H. Frank

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262162494.003.0011

This chapter illustrates how context shapes demand, and uses the boundlessness of human desire—an aspect that Keynes was quick to dismiss—as an example. Keynes seems to have believed that context mattered only for goods that “lift us above,” or “make us feel superior to, our fellows.” Like most other economists, he believed that demands originating from such feelings are, at most, a minor component of overall economic activity. The chapter goes on to show the relativity of quality standards, and posits that, by placing the desire to outdo others at the heart of his description of the category of goods whose demands are shaped by context, Keynes confined that category to the periphery. There are no obvious limits on the extent to which quality standards can escalate, since the richer we become, the more we are willing and able to pay for memorable experiences.

Keywords:   context, demand, boundlessness of human desire, economic activity, relativity of quality standards, memorable experiences

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