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Pumped Up About Kicks? The Economics Behind the Decisions that Drive the Shoe Craze

So many shoes! Crazy to think that we demand so many of them

When was the last time you bought your last pair of shoes? Well, I’m willing to bet that it wasn’t too long ago. Everyone these days, even me, loves nothing more than going to a shoe store and buying the nicest and most comfortable pair of shoes to help us in whatever activities we choose, whether that be hiking, basketball, or running. From Jordans to Adidas to New Balance, shoes have become not only a simple article of clothing, but a way of life and fashion – in fact, in 2021, the shoe industry was valued at $131.1 billion. But, what drives such enthusiasm about shoes, especially when some of them become ridiculously expensive? What are the incentives (key economics term) behind the consumers who participate in the shoe frenzy?

This mob outside of a Nike store that opened in 2016 in Soho, New York, was so rowdy that it brought tons of complaints from Soho residents. I guess this goes to show how crazy we are about shoes! (Source: New York Post)

Well, to start, most consumers are irrational. I know, it sounds a little harsh, but it’s true. This irrationality means that consumers do not always make the most logical choices and make their decisions based on other influences rather than what would objectively be the best decision for themselves. Decisions to buy shoes are likewise influenced by this irrationality. In fact, consumers often buy tons of shoes in order to feel accomplished, improve their self-esteem, or feel socially accepted, not because they actually need shoes. After all, shoes are such a big part of society, so why not buy lots of nice shoes to fit in?

However, as I’m sure most of you have noticed, people are still crazy about shoes even when they are extremely expensive. Why is that? Well, this also stems from consumers’ irrationality. Some consumers want to show off their prestige and “higher” status through purchasing extremely expensive goods even if buying these goods does not make any sense, and this mentality definitely holds true for shoes. Many consumers also believe that more expensive shoes means better quality and are willing to pay up for the superior quality that these shoes supposedly have. However, this idea is not always true — a study on running shoes found that customers’ satisfaction went down as the price went up. This is most likely because consumers expected much more from the more expensive shoes and were disappointed when these shoes did not live up to their expectations.

This pair of Yeezys were sold for $11,400! Incentives really are a powerful motivator in our decisions

So, the next time you go to Nike or Adidas to buy your next pair of shoes, ask yourself: is it out of need or irrationality? And if it’s out of irrationality, you might want to buy a pair of shoes from New Balance, otherwise known as my favorite brand of sneakers.


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