Feb 3, 2011

Trickle Up and Trickle Down Effect

Here are two concepts Trickle up and trickle down approach I came across. There are multiple context in trickle down effect. Lets see the effect in economic context.

Trickle Down effects that when benefits goes to affluent then benefits trickle down to poor. So, government should not put heavy burden of tax etc on affluent.
Contrary to that, trickle up effects says that when poor gets money then they directly boost economy and it creates better economy. Wealthy will get benefits of this effect from the poor so money and benefits will trickle up.
Maslow's hierarchy of needs states that when you have enough money that you can live a decent and secure life then extra money come to those will not directly goes to market. As those people will deposits money for future or they do not care much of those extra money. Whereas poor will try to feel better and he may try to meet physiological and safety needs. Money to poor can help them feel secure thus bring happiness and confidence. It helps market grow because of this expenditure. This also gives benefits to wealthy as trickle up effect.

In marketing term, trickle-down has two meanings. One is when a new consumer product comes to market then it sell at costly first then slowly it become cheaper and goes to general public.
Another meaning is when a new fashion comes to market and goes to lower social class first then high social class people do not desire for those things.