<blockquote>
<p>How does a lack of incentive to purchase new stuff affect economics?</p>
</blockquote>
<p>This would lower demand for the 'new stuff', meaning all else equal new goods would have lower prices than in absence of resale market.</p>
<blockquote>
<p>I've perceived as if a lot of economics is rooted in the idea of continued innovation and consumption, but then I've realized that a lot of what's considered &quot;old&quot; by some standards has still rather good use value. That old game console, those old vintage clothes, ...</p>
</blockquote>
<p>This is not completely correct perception. Innovation plays big role in theories of economic growth, that is theories that try to explain why societies become more prosperous over time in a sense they are allowed to produce more with less. However, economic growth is just one of the subfield of macroeconomics, which is already subfield of economics.</p>
<p>In most economic theories, and most areas of economic research, innovation does not play big role. You can see from good graduate level textbooks such as Varian Microeconomic Analysis or MWG Microeconomic Theory or even Romer Advanced Macroeconomics that most models do not deal with innovation.</p>
<p>When it comes to consumption, consumption features heavily in most economic models, but in economics jargon consumption means something different than in day to day English. In economics, even spending time with your friends and family would be considered consumption (leisure consumption to be precise - see above mentioned sources) since consumption in economics is defined as 'final' use of resources, goods and services. Final meaning these goods and services or resources are used to satisfy your needs, whether those needs are food or shelter or socialization with friends, as opposed to using goods or services for future production (see <a href="https://www.oxfordreference.com/display/10.1093/acref/9780198759430.001.0001/acref-9780198759430-e-550?rskey=NYZBks&amp;result=1" rel="nofollow noreferrer">Oxford dictionary of economics</a>).  So while economic theory discusses consumption a lot, it is not only focused on consumption of newly produced goods or services (e.g. you have lot of endowment models where people just trade already existing goods), and it also includes variety of activities that would not be considered consumption in layman's  vernacular like simply enjoying your free time.</p>
<blockquote>
<p>How does such &quot;recyclist&quot; paradigm affect economics?</p>
</blockquote>
<p>Most of economics (do you perhaps mean economy since economics is the study of economy?) is unaffected by people recycling stuff. Many models do not even focus on production, because it is not relevant. For example, in auction theory for optimal design of auctions it is usually not relevant to model production or recycling. In regular models, second hand goods would typically just lower demand for first hand goods. There might be perhaps some exceptions in the whole corpus of economic research but this is too broad of a question for SE format. However, in short such models would be most relevant for subfield of environmental economics, where we care a lot about CO2 footprint or environmental impact of production and second hand goods CO2 footprint is already skunked ex post.</p>
<blockquote>
<p>Is it about just new models of businesses or does it break some fundamental assumptions about e.g. monetary policies? If, for example, value is based on added value, which reusing already produced stuff may not carry.</p>
</blockquote>
<p>This does not break any assumptions behind standard macroeconomic models. Even though many models won't have explicitly second hand market as an explicit part of the model, most economic models have demand functions, and demand function is well known to be affected by existence of other substitutes. Even if you do not model the substitutes explicitly you can implicitly allow for them by your choice of demand parameters (e.g. we know substitutes tend to make demand more elastic so just use parameters that give you more elastic demand if you want).</p>
<p>Regarding new business models, virtually all countries I can think of have second hand shops, and as far as I know these existed for very long time, so it is not clear how would this require some new business model other than the models that these second have shops already have.</p>

CC BY-SA 4.0
2023-04-07T14:58:21.410Z
Well because in the theoretical situation of https://en.wikipedia.org/wiki/Post-scarcity_economy or "we already have all the goods we ever need" there'd not be any possibility for adding value, except for maybe transferring existing stuff around (while we already have infinite energy, etc.).
mavavilj
CC BY-SA 4.0
2023-04-07T15:46:28.160Z
@mavavilj 1. post-scarcity economy is not what you describe. That is an economy when production severely outpaces demand, not an economy where goods are reused. For example, a post scarcity in pizza market would mean so many pizzas are actually being produced that even at nearly zero price you can completely fill yourself. You can't have second hand food so you can't simply not produce in post scarcity economy
1muflon1
CC BY-SA 4.0
2023-04-07T15:48:36.350Z
2. even second hand stores are adding value through services they provide even though goods themselves do not add any extra value. In addition as already mentioned in my answer this is moot point. There are already plethora of economic models where you have endowment economies where added value is literally 0. People just trade endowments.
1muflon1
CC BY-SA 4.0
2023-04-07T19:40:40.200Z
Well post-scarcity in the sense of achieving it through minimalism, rather than production technology. It's evident that once demand stifles, then so does supply, but then the question is, what does happen to a modern economy if everyone decided to become ascetics?
mavavilj
CC BY-SA 4.0
2023-04-07T21:50:11.393Z
@mavavilj 1. that is not post scarcity, since people would still have to consume food etc. and it would not become abundant just because people want to live ascetically. 2. again the same answer as above applies. You could use the same models to analyze that situation. In terms of GDP growth it would result in sharp decline in GDP but it would not break any economic model per se
1muflon1
CC BY-SA 4.0
2023-04-07T11:46:51.493Z
2023-04-07T11:46:51.493Z
1muflon1
<p>How does a lack of incentive to purchase new stuff affect economics?</p>
<p>I've perceived as if a lot of economics is rooted in the idea of continued innovation and consumption, but then I've realized that a lot of what's considered &quot;old&quot; by some standards has still rather good use value. That old game console, those old vintage clothes, ...</p>
<p>How does such &quot;recyclist&quot; paradigm affect economics?</p>
<p>Is it about just new models of businesses or does it break some fundamental assumptions about e.g. monetary policies? If, for example, value is based on added value, which reusing already produced stuff may not carry.</p>

<macroeconomics><microeconomics><consumer-theory><consumption>
How does a lack of incentive to purchase new stuff affect economics?
mavavilj
# How does a lack of incentive to purchase new stuff affect economics?

(Asked by: username_0 on 2023-04-07)

How does a lack of incentive to purchase new stuff affect economics?

I've perceived as if a lot of economics is rooted in the idea of continued innovation and consumption, but then I've realized that a lot of what's considered "old" by some standards has still rather good use value. That old game console, those old vintage clothes, ...

How does such "recyclist" paradigm affect economics?

Is it about just new models of businesses or does it break some fundamental assumptions about e.g. monetary policies? If, for example, value is based on added value, which reusing already produced stuff may not carry.

**Tags:** macroeconomics, microeconomics, consumer-theory, consumption


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## 1 answers

### Answer by username_1 on 2023-04-07. Score: 0

> How does a lack of incentive to purchase new stuff affect economics?

This would lower demand for the 'new stuff', meaning all else equal new goods would have lower prices than in absence of resale market.

> I've perceived as if a lot of economics is rooted in the idea of continued innovation and consumption, but then I've realized that a lot of what's considered "old" by some standards has still rather good use value. That old game console, those old vintage clothes, ...

This is not completely correct perception. Innovation plays big role in theories of economic growth, that is theories that try to explain why societies become more prosperous over time in a sense they are allowed to produce more with less. However, economic growth is just one of the subfield of macroeconomics, which is already subfield of economics.

In most economic theories, and most areas of economic research, innovation does not play big role. You can see from good graduate level textbooks such as Varian Microeconomic Analysis or MWG Microeconomic Theory or even Romer Advanced Macroeconomics that most models do not deal with innovation.

When it comes to consumption, consumption features heavily in most economic models, but in economics jargon consumption means something different than in day to day English. In economics, even spending time with your friends and family would be considered consumption (leisure consumption to be precise - see above mentioned sources) since consumption in economics is defined as 'final' use of resources, goods and services. Final meaning these goods and services or resources are used to satisfy your needs, whether those needs are food or shelter or socialization with friends, as opposed to using goods or services for future production (see [Oxford dictionary of economics](https://www.oxfordreference.com/display/10.1093/acref/9780198759430.001.0001/acref-9780198759430-e-550?rskey=NYZBks&result=1)). So while economic theory discusses consumption a lot, it is not only focused on consumption of newly produced goods or services (e.g. you have lot of endowment models where people just trade already existing goods), and it also includes variety of activities that would not be considered consumption in layman's vernacular like simply enjoying your free time.

> How does such "recyclist" paradigm affect economics?

Most of economics (do you perhaps mean economy since economics is the study of economy?) is unaffected by people recycling stuff. Many models do not even focus on production, because it is not relevant. For example, in auction theory for optimal design of auctions it is usually not relevant to model production or recycling. In regular models, second hand goods would typically just lower demand for first hand goods. There might be perhaps some exceptions in the whole corpus of economic research but this is too broad of a question for SE format. However, in short such models would be most relevant for subfield of environmental economics, where we care a lot about CO2 footprint or environmental impact of production and second hand goods CO2 footprint is already skunked ex post.

> Is it about just new models of businesses or does it break some fundamental assumptions about e.g. monetary policies? If, for example, value is based on added value, which reusing already produced stuff may not carry.

This does not break any assumptions behind standard macroeconomic models. Even though many models won't have explicitly second hand market as an explicit part of the model, most economic models have demand functions, and demand function is well known to be affected by existence of other substitutes. Even if you do not model the substitutes explicitly you can implicitly allow for them by your choice of demand parameters (e.g. we know substitutes tend to make demand more elastic so just use parameters that give you more elastic demand if you want).

Regarding new business models, virtually all countries I can think of have second hand shops, and as far as I know these existed for very long time, so it is not clear how would this require some new business model other than the models that these second have shops already have.

> **Comments:**
> **username_0**: Well because in the theoretical situation of https://en.wikipedia.org/wiki/Post-scarcity_economy or "we already have all the goods we ever need" there'd not be any possibility for adding value, except for maybe transferring existing stuff around (while we already have infinite energy, etc.).  
> **username_1**: @username_0 1. post-scarcity economy is not what you describe. That is an economy when production severely outpaces demand, not an economy where goods are reused. For example, a post scarcity in pizza market would mean so many pizzas are actually being produced that even at nearly zero price you can completely fill yourself. You can't have second hand food so you can't simply not produce in post scarcity economy  
> **username_1**: 2. even second hand stores are adding value through services they provide even though goods themselves do not add any extra value. In addition as already mentioned in my answer this is moot point. There are already plethora of economic models where you have endowment economies where added value is literally 0. People just trade endowments.  
> **username_0**: Well post-scarcity in the sense of achieving it through minimalism, rather than production technology. It's evident that once demand stifles, then so does supply, but then the question is, what does happen to a modern economy if everyone decided to become ascetics?  
> **username_1**: @username_0 1. that is not post scarcity, since people would still have to consume food etc. and it would not become abundant just because people want to live ascetically. 2. again the same answer as above applies. You could use the same models to analyze that situation. In terms of GDP growth it would result in sharp decline in GDP but it would not break any economic model per se  

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