Doghouses for the 1 Percent

A blog about business and economics.
June 29 2012 12:36 PM

Doghouses for the 1 Percent

As income inequality rises, people who make things really need to exercise imagination to dream up new categories of luxury goods to sell to the economic elite. Today we get luxury doghouses:

Take, for instance, the Palladian-style mini-mansion that Glenna and Ed Hall bought at a charity auction three years ago for about $300. With Jeffersonian columns that match the ones on their home in Roanoke, Va., the two-foot-tall doghouse makes a perfect accent for the garden. No one seems to mind that the garden is off-limits to Maggie May, their 28-pound whippet-borzoi mix — least of all Maggie May.
“We bought the house because it looks a lot like our house,” said Mrs. Hall, 66, a retired interior designer. “Maggie’s never been in it. She’s a house dog.”

This is what's known in the business as the "diminishing marginal utility of money." If you have substantial savings and an income of $550,000 a year, then an extra $25,000 doesn't necessarily do much to improve your life. You may end up spending it on a doghouse that your dog never uses. By contrast if you have an income of $50,000 and a negative net worth, a check for $25,000 can do a great deal to improve your life. That's the basic reason why "spreading the wealth around" can make the world a better place.

Note also that while in principle I think we should tax consumption rather than income, the dividing line between consumption and investment can get a little fuzzy. A really fancy doghouse is arguably a form of residential investment, but in practical terms I'd consider it consumption.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


The World

The Budget Disaster that Sabotaged the WHO’s Response to Ebola

Are the Attacks in Canada a Sign of ISIS on the Rise in the West?

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

Is It Offensive When Kids Use Bad Words for Good Causes?

Fascinating Maps Based on Reddit, Craigslist, and OkCupid Data


The Real Secret of Serial

What reporter Sarah Koenig actually believes.


The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

In Praise of 13th Grade: Why a Fifth Year of High School Is a Great Idea

A Comically Inane Court Opinion Just Upheld Puerto Rico’s Gay Marriage Ban

  News & Politics
Oct. 23 2014 3:55 PM Panda Sluggers Democrats are in trouble. Time to bash China.
Oct. 23 2014 5:53 PM Amazon Investors Suddenly Bearish on Losing Money
Oct. 23 2014 5:08 PM Why Is an Obscure 1968 Documentary in the Opening Credits of Transparent?
  Double X
The XX Factor
Oct. 23 2014 11:33 AM Watch Little Princesses Curse for the Feminist Cause
  Slate Plus
Oct. 23 2014 11:28 AM Slate’s Working Podcast: Episode 2 Transcript Read what David Plotz asked Dr. Meri Kolbrener about her workday.
Oct. 23 2014 6:07 PM Devil in a Trenchcoat Will the new NBC series bring Constantine into the mainstream, or ruin the character forever?
Future Tense
Oct. 23 2014 5:53 PM South Florida’s Desperate Secession Movement
  Health & Science
Oct. 23 2014 5:42 PM Seriously, Evolution: WTF? Why I love the most awkward, absurd, hacked-together species.
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.