The economics of political correctness
... I may buy an exquisite variety of wine because I genuinely enjoy the taste, or acquire a degree from a reputable university because I genuinely appreciate what that university has to offer. But my motivation could also be to set myself apart from others, to present myself as more sophisticated or smarter. From merely observing that I consume the product, you could not tell my motivation. But you could tell it by observing how I respond once other people start drinking the same wine, or attending the same university.

If I value those goods for their intrinsic qualities, their increasing popularity will not trouble me at all. After all, the enjoyment derived from wine or learning is not fixed, so your enjoyment does not subtract from my enjoyment. I may even invite others to join me – we can all have more of it.

But if you see me moaning that the winemakers/the university have ‘sold out’, if you see me whinging about those ignoramuses who do not deserve the product because they (unlike me, of course) do not really appreciate it, you can safely conclude that for me, this good is a positional good. (Or was, before everybody else discovered it.) We can all become more sophisticated wine consumers, and we can all become better educated. But we can never all be above the national average, or in the top group, in terms of wine-connoisseurship, education, income, or anything else. We can all improve in absolute terms, but we cannot all simultaneously improve in relative terms. ...