So That's What Makes Bankers Tick

Inconspicuous luxury watches are the new status symbols on Wall Street

Over the weekend The New York Times featured ultralight luxury watches -- not in Styles, as I would have expected, but in the Business section. A UCLA marketing professor, Xavier Drèze, explains:

"Men wear these costly watches to gain prestige," he said. "You are signaling 'we are alike' to other people of similar status who can recognize the value of the watch."

In the general public, these watches aren't likely to draw attention the way a jewel-encrusted timepiece might.

"If you wear a million-dollar mechanical watch, or even a $40,000 one, in the average room no one will know," Professor Drèze said. "The watches are actually examples of inconspicuous consumption."

(An unintended consequence of the influence of Thorstein Veblen's 1899 Theory of the Leisure Class and Vance Packard's 1959 The Status Seekers may have been to promote even even greater spending to avoid crude ostentation -- for example, platinum watches that may resemble stainless steel to the uninitiated.)

Happy (bonus) days are here again. The Financial Times also reports that the ultra-premium brands have held their own during the world economic crisis better than the rest of the Swiss industry. Somehow there must be a spiritual link between these ultra-refined timepieces and the intricate derivatives than pay for so many of them. (As an investment the watch has at least the advantage that its mechanism and specifications are usually published and intelligible; in fact some have admirably transparent glass backs for viewing the movement.) Two or more people with the extra money and time to buy six-figure watches that that the canaille won't even recognize can thus have confidence in shared values as business partners -- the point seems to be less watchmaking than matchmaking.

After the auction of Bernard Madoff's extensive vintage watch collection, some might be tempted to see the hobby as a warning signal. Au contraire, say some experts. The fraudster's often questionable taste and especially his preference for restoring watches (thereby diminishing their market value) should have been tip-offs to true connoisseurs.