Question

For Galbraith, why is the dependence effect bad? Provide evidence either for or against the dependence effect?

Answer 1

Galbraith is critical of the dependence effect because it creates needs among consumers only to satisfy them. In other words, the process of production generates previously non-existent desires and wants, which it then aims to fulfill. Galbraith questions whether or not this benefits humankind, because they would have perhaps never experienced that desire under other circumstances. Perhaps the best illustration of the dependence effect is the sale of luxury goods. If we were to specifically consider a designer handbag, it would cost thousands of dollars but serves no extra purpose than any ordinary handbag. Yet the manner in which it might be advertised and marketed may indice individuals to purchase them.