Trickle-down economics
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Trickle-down economics is a term used in critical references to economic policies to say they disproportionately favour the upper end of the economic spectrum, i.e. wealthy investors and large corporations. In recent history, the term has been used broadly by critics of supply-side economics.
Major US examples of what critics have called "trickle-down economics" include the Reagan tax cuts, the Bush tax cuts, and the Tax Cuts and Jobs Act of 2017.[1]
Major UK examples include the economic policies of Friedrich Hayek, and Liz Truss's mini-budget tax cuts of 2022.[2]
As of 2023, a number of studies have failed to demonstrate a link between reducing tax burdens on the upper end and economic growth.
Trickle-down economics contrasts with trickle-up economics (also known as bubble-up economics) which is more associated with demand-side economics.
Trickle-down effect
The trickle-down effect is a model of product adoption in marketing that affects many consumer goods and services.
Trickle-down effect states that fashion flows vertically from the upper classes to the lower classes within society, each social class influenced by a higher social class. Two conflicting principles drive this diffusion dynamic. Lesser social groups seek to establish new status claims by adopting the fashions of higher social groups in imitation, whilst higher social groups respond by adopting new fashions to differentiate themselves. This provokes an endless cycle of change, driving fashion forward in a continual process of innovation.
Due to this dynamic, initially, a product may be so expensive that only the wealthy can afford it. Over time, however, the price will fall until it is inexpensive enough for the general public to purchase.[3]
References
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