Positional good
Positional goods are products and services whose value is mostly, if not exclusively, a function of their ranking in desirability in comparison to substitutes. The extent to which a good's value depends on such a ranking is referred to as its positionality.
Like land, positional goods often earn economic rents or quasi-rents. Examples of positional goods include high social status, exclusive real estate, a spot in the freshman class of a prestigious university, a reservation at the "hottest" new restaurant, and fame. The measure of satisfaction derived from a positional good depends on how much one has in relation to everyone else. A society that devotes more resources to positional goods is arguably wasting effort, since a gain for one must come at a loss for another.
Competitions for positional goods are zero-sum games because such goods are inherently scarce, at least in the short run. Attempts to acquire them can only benefit one player at the expense of others. By definition, not everyone can be the most popular, cool, or elite, and in the same sense not everyone can be a star athlete because all those terms imply a separation or superiority over other people. Georgists consider real estate a positional good because the value of your land primarily depends not upon anything inherent to that land or the buildings which are affixed to it, but on its ranking in desirability against other plots.[citation needed]
In general positional goods cannot be created, only redistributed, while material goods can be created with time and effort. Most goods have a positional and a material component, however. Fast cars may be considered to be inherently scarce because your perception of the car's speed depends on its relation to other vehicles, but there is still an absolute value attached to satisfaction gained from the speed at which the car can travel, so it can be considered as having a positional aspect in that only some cars can be the fastest. Since a car is a complex product made of many other materials, some of which are limited in supply (steel) and some which are renewable (leather), they may instead be Veblen goods.
The term was coined by Fred Hirsch in 1976 (in: Fred Hirsch, The Social Limits to Growth, Routledge & Kegan Paul, London, 1976 ISBN 0-674-81365-0). It is used to describe economic goods which are considered to possess a relative or social value rather than an absolute one.
Another example is that not everyone in a country can acquire the benefits of a Rolls Royce because even if everyone could acquire one, it would not longer show status. Of course, the costs of manufacture are substantial, mainly due to use of rare materials and lack of economies of scale due to limited output, but the consumer is 'paying for the name' and the company is not necessarily making a higher profit because they are not just charging more for a perfectly normal car.
Cornell Economist Robert Frank defines positional goods as items which derive the most satisfaction in relation to the consumption of people the consumer views as peers.
For example, consider the following question: would you rather live in a world in which your house is 4000 square feet, while your peers lived in 6000 square-foot houses, or in a world in which your house is 3000 square feet, while your peers live in a 2000 square-foot house?
In studies conducted under controlled conditions, most people said (as you would?) that they would prefer the smaller house in the world in which their peers lived in a smaller house, DESPITE the fact that they would be living in a smaller house.
Thus, Frank would deem housing to be a positional good.
In contrast, a non-positional good is one Frank defines as a good which you would consume without regard to the consumption of your peers. Consider vacations: most people say they would rather have a 4-week vacation in a 6-week vacation world, over a 2-week vacation in a 1-week vacation world.
Therefore, according to Frank, vacations are exemplary of non-positional goods.