Las Vegas: Paying a Price to be Left Alone

It's sometimes funny how often you can look at a thing and then suddenly it gives you a new idea. A recent trip to Las Vegas helped focus an idea that we probably had been working on for awhile, but it took Vegas to tease out.

Reading some of our earlier posts on theories of consumption and wealth, as put forward by the likes of Thorstein Veblen, we have, in the past, toyed with the idea of purpose and uses of wealth. Last week, Vegas helped illustrate that wealth is anti-social and insular. Walking around the tourist areas, proved the inspiration for this.

Tourists areas are by nature supposed to attract people, giving one ample opportunity to study crowds and crowd behaviours, so one of the interesting things we noticed about Las Vegas was the general trend that geography and social density are related to wealth. True, this has been pointed out before, that zoning permits tend to group like economic groups together, something that is reinforced through real estate prices. Also it is true that the distribution of wealth is uneven, there are the numbers of wealthy people decreases as the value of wealth increases. However, quite a few tourist areas are free, or have a significant portion of their attractions available for free. This leads one to suggest that the distribution of tourists, whose goals are to see attractions, would be relatively even across destinations.

This is not true, however, in part because the ancilliary services (like food and souvenirs) to support these attractions are expensive. The prospect of visiting an attraction and paying six dollars for a cup of coffee dissuades a number of people, in effect turning the extra few dollars per cup into a premium some are willing to pay in order to have a cup of coffee in less crowded conditions. A survey of restaurants can yield the same interpretation: witness the crowding of buffet lines and the sparse attendance of the Michelin-starred restaurants. With restaurants particularly, but also many other services, such as shopping, not all of the price differential can be attributed to what we'll call a "privacy premium". Part of the price differential is to recoup costs from superior or rarer ingredients, as well as the higher real estate prices. Furthermore, some higher end shops also include a more personalized shopping experience as part of their price differential: fewer customers in a store increases the likelihood that the shopper can receive individual attention, either informally or through appointment. This extra attention can often help identify a better suited item for purchase, just as eating more expensive food can result in eating food with healthier ingredients.

Again, we find wealth a fascinating area of study, especially the ways in which the possession of even a little bit of wealth helps to reinforce or maintain the benefits of wealth.