“Hipsters” are that hard-to-define but you-know-it-when-you-see it segment of the population that is self-consciously counter-cultural. When I think of a hipster, I think of someone who explores the fringes of culture in music, fashion, and technology.
There is plenty of disdain directed at hipsters, but I think they are just an easy group for stressed-out, over-leveraged Americans to kick around. (Remember what your parents taught you: “People make fun of others to feel better about themselves.”) I want to point out from an economic perspective what an incredible service hipsters provide for all of us non-hipsters.
Have You Thanked A Hipster Lately?
I’ve written several times now about what economists call “externalities” (for example, here, here, here and there.) A positive externality exists when something you do beneficially affects an un-related party. For example, you may plant flowers for your own enjoyment but everyone else passing by also gets to enjoy them. Thus, you exert a positive externality on the passer byes.
One characteristic common to many hipsters is “early adoption,” most notably in the area of technology. Hipsters tend to try out new technologies such as smart phones before the rest of us. They do it because they enjoy trying out the latest items on the market. Yet, this inadvertently benefits everyone else.
Being an early adopter is a double-edged sword. It means you are “first,” but it also means you get burned more often too. New technologies tend to have flaws which get fixed in later versions. Some new products turn out to be less than promised. An early adopter takes-on this risk and then tells everyone else if a product is good or not. Early adopters exert a positive externality on non-early adopters. They take the risk of buying a piece of junk and then help us non-hipsters know which items are good and which are bad.
Hipsters don’t just tend to be early adopters of technology. They also tend to find “new” areas of a city to live in. Usually these hipster havens are older, slightly sketchy, parts of a city with relatively good proximity to transportation and downtown.
These areas are not the kind of places “normal” people would feel comfortable moving into. Real estate agents don’t bother to show families even reasonably priced homes in these areas. Yet, hipsters seem to act as pioneers who take more risk than their parents would advise. They take a risk and move into such areas much like early pioneers took some risks to go West. With both hipsters and pioneers, there is a payoff (affordable property, 40 acres). But, there is a risk too (crime, death by scalping).
Again, however, hipsters provide a really great benefit for everyone else. They find these forlorn parts of the city which in turn helps to clean up the area which in turn makes it more appealing to non-hipsters. Hipsters take all the risk but then others can reap the benefits. Hipsters provide free, valuable information to all those people making fun of them. In many places, gentrification occurs which raises property values and tax revenues. Perhaps the best recognized example of this is Williamsburg, Brooklyn.
What Makes a Hipster?
I’m trying to think about whether a higher willingness to take on risks is almost a fundamental characteristic of “true” hipsters (not the tag-along imitators). It would be interesting to learn whether these hipsters are less risk-averse (or even risk-loving) by standard measures used in economics laboratory experiments.
My wife showed me this the other day: the hipster trap! If a greater propensity to take on risk is a hipster trait, then this picture has a whole new deeper meaning!
HT: Tim (whose last name becomes “Hipster” if you add one letter), for a discussion that lead to this post.