Planned obsolescence

Giles Slade’s new book, Made to Break: Technology and Obsolescence in America made me want to list coherent microeconomic theories of planed obsolescence:

1. Consumer tastes change rapidly and so new models are needed frequently.

2. Old models become rapidly obsolete because of technical progress.

3. We are playing a durable goods monopoly game and suppliers want consumers to know they must buy the wasting asset now, rather than waiting for its price to fall.

4. Suppliers can’t credibly signal true durability, so the market standard ends up being a cheap, short-lasting good, sold at a relatively low price.

#1 and #2 are optimal and indeed splendid reasons to have planned obsolescence.  #3 is lame, and the time horizons for each decision don’t match up for this to be real.  #4 I can believe, but this implies too many light bulbs under the kitchen sink, or too many trips to K-Mart, rather than any great tragedy of consumer rip-off.

Here is an interview with Slade.  I found some useful material in his book, but no actual argument.

Comments

1 is only optimal in the sense that short attention spans and encouragement of waste are optimal. Sure, we should all get what we want but "consumer tastes" are driven by a producer culture that encourages people to want the latest thing. Yes, there is probably a natural competitive drive to have a better, newer something but it is pounded into us more than it is inborn.

2 is optimal only if the technological improvements are real and not merely bells and whistles. Otherwise we are back at #1. And really encouraging waste in addition to being slaves to fashion.

3 I have no opinion about either way.

4 might be a minor problem when it comes to light bulbs. As the product at issue gets more expensive it becomes less of a minor problem. When those products require tons of plastic and toxic metals to make, the problem becomes more than just a consumer problem.

Another thing is that people are more mobile today. Each time I move to a different state, I give away my old toaster oven and buy a new one. The same goes with other appliances: some things are easier to buy again than to transport.

However, I think the time for long lasting light bulbs has come.

What about items, such as kids toys, cell phones, pdas, and other gadgets, that are designed to work just long and well enough to get you dependant on it or very excited about it, so that, when it inevitably breaks, you have a much higher likelihood of buying a second,third,fourth etc.?

A thought that may be totally off:

Isn't there always a trade-off between current value and long-term durability? (At the very least, things made to last are more expensive, and therefore not as good of a current value.) If this is true, wouldn't you expect goods to become less durable as the discount rate increases? And hasn't the appropriate discount rate increased over the past 500 years as we moved from a world where global wealth was essentially stagnant (and had been for 3000 years) to a world where it is constantly appreciating?

Wouldn't this process explain the drop in durability?

Producers can signal durability (even if the signal is entirely dissociated from actual evidence-based durability in the field) through marketing via brand. A brand builds a secondary construct within the minds of a social subset of consumers that 'like' that brand, imbuing attributes such as 'good quality control'; 'good attention to detail'; 'long-lasting'; 'solid'; 'well-made' and so on, and this agreement among the fanbase leaks out unto the populace at large.

This has several effects: one, an older brand that may be faced with economic upheaval can continue to 'harvest' the brand's effect until one day people wake up and realise it was over long ago; and another is that as a consumer, there's no real need to be discerning yourself - you simply offload all the responsibility of shopping skill onto the brand - pay a bit more for a brand and you'll 'expect' all the good stuff that a skilled shopper could innately achieve, except that you're a useless shopper, but that's okay, you only buy brands anyway - problem solved.

One thing that could become a crucial ingredient in future commercial sustainability and also user-generated 'advertising' (ie: reviews, testimonials, etc) would be a notion of 'end of product' responsibility on the part of manufacturers. If it became the (publicly accepted) norm for all producers to accept back the remains of the product at the end of the lifecycle, then products would not only be available to study patterns in usage to expiry, but it'd make a lot of sense if the producers didn't have to accept back quite so much of this broken, badly constructed or even simply out-of-fashion stuff that has to be someone's responsibility somewhere to dispose of in an ecologically suitable manner anyway.

You don't compute the depreciation on those durable consumer goods and subtract it from anywhere do you? You don't suppose American consumers have lost TEN TRILLION DOLLARS in depreciation on cars since 1945 do you?

But when dummies buy stupidly designed cars because "tastes change" it gets added to GDP and called economic growth.

http://discussions.pbs.org/viewtopic.pbs?t=28529

psik

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