In the last year, I purchased three pairs of running shoes: Decathlon Kalenji ($30), Nike Pegasus ($120) and Saucony Endorphin Speed ($160) I believe these running shoes provide valuable insight into the question of how despite being richer than ever, so many people feel lacking.
The Pegasus is Nike’s most popular and iconic running shoe. First released in 1983 for $50, the Pegaus is now in its 38th edition and sold for $120. Plugging the 1983 $50 figure into an inflation adjustment calculator based on CPI increases, it suggests that the original Pegaus were valued at approximately $130 in today’s dollars.
38 year laters, Nike sells a far superior version of the original Pegasus at roughly the same price. This is to say: all the gains in material research and shoe innovation, increases in productivity, a larger globalized market, reductions in trade barriers, cheaper labour and resource costs etc. went into making a better running shoe rather than a cheaper running shoe.
The Decathlon running shoes are cheaper and superior to the original 1983 Nike Pegasus but are “slower” compared to the new Nike Pegasus. The Saucony Endorphin Speeds surpass them both and offers a “faster” but more expensive running shoe.
To summarize, you can now buy shoes that are either: 1) cheaper and better than what was available in 1983 2) the same price but higher quality or 3) more expensive and higher quality.
Unfortunately, the situation for runners is worse in 2021 compared to 1983 because even buying the equivalent model shoe will now leave you “slower” than your peers.
While running is a very individual sport, it is heavily biased by others. The frequency, distance and pace one aspires to run is greatly influenced by the behaviour of those around us. If your friends are struggling to run the local 5KM race in less than 30 minutes, you are less likely to feel the need to run a marathon in under 3 hours.
The problem with “faster” running shoes is that any improvement in running shoe quality leads to running norms changing in sync. While the Decathlon shoes are better and cheaper than the 1983 Nike’s, which in theory should represent progress, very few runners want these shoes because they will leave them relatively worse off compared to other runners with “faster” shoes. For anyone in 2021 committed to running, Decathlon shoes and the Nike Pegasus are no longer good enough when your peers will be using more premium and faster shoes.
In contrast to Nike and the running shoe industry is Ikea. Iconic Ikea products like their Poang chairs, Lack table and Billy Bookshelf all decreased in price over the last thirty years by more than a factor of 5. Ikea used all of the advances in modern capitalism to sell a similar quality product at a far lower price. People buy affordable furniture, unlike running shoes, for objective function, not relative performance compared to their peers.
Due to the innate human desire to outperform our peers, most gains from the modern economic system have gone into creating more expensive but relatively superior products that by changing norms, leave us with less money and being no better off.