Relational goods are non-material goods that can only be produced and consumed within groups, and which are intrinsically linked to relationships and interaction. Popular examples include the enjoyment of a football game in a stadium, where the collective enjoyment of the game adds a relational good in terms of excitement and enjoyment to all in the stadium. This constitutes an experience that cannot be had when watching alone. Other examples include group charity work, friendship or reciprocal love. Relational goods can be necessary for the optimization of an activity like the football game example. On the other hand, a relational good may be the relationship in itself, with the good being dependent on the existence of the relationship. Friendships is an example of a relationship in which the value that comes from the relationship is tied up in the existence and maintenance of the relationship.
The essential point tends to consider relational goods as goods that are produced and consumed simultaneously by those interacting in the relationship.
Background Adam Smith, in his 1759 work The Theory of Moral Sentiments, first outlined the idea of non-instrumental relational positives. The 18th century Italian tradition of Civil Economy put the concept of the inner relational nature of the person at the core of the economic science. The idea was largely abandoned until the 1970s by the mainstream (although we can find intuitions in Mill, Marshall, the Austrian school, Keynes, Hirschman), when the discussion of happiness again came to light with the first analysis of the Easterlin Paradox. A solid concept of relational goods was built in the following years in an attempt to reconcile this paradox, and to answer the issue of why voter turnout is higher than rational choice theory suggests. Thus relational goods as an economic concept became more researched in the late 1980s when economists Benedetto Gui wrote From Transactions to Encounters: The Joint Generation of Relational Goods and Conventional Values (1987), and Carole Uhlaner penned Relational Goods and Participation: Incorporating Sociality into a Theory of Rational Action (1989). They aimed to change the way economist think of relationships, and viewed them as non-instrumental goods that have value within themselves. This idea was adopted from other fields that understood human interaction as a fundamental part of human life, with social deprivation being incredibly harmful to human well-being. Economists adopted this concepts, and began to involve relational analysis to study what creates happiness for individuals. While commodities may be exchanged or consumed during an encounter, it is the utility that comes from the encounter specifically, rather than the utility of the goods consumed, that is considered a relational good. A shopkeeper may sell a good to a customer, but the relational good in that instance is the interaction, the potential enjoyment, sharing and emotional connection that is swapped which is relevant. Due to the highly intangible nature of this connection, relational goods and their value is difficult to measure, and thus study. Many studies instead measure social interactions (volunteering, clubs, church events, parties and gatherings etc.) against self-proclaimed levels of happiness, thus identifying some impacts of socialization. What is infinitely clearer is that deprivation of human interaction can have drastic negative effects physiologically, which aids the hypothesis that relational goods at the very least have health-related utility. Theories on relational goods can have many policy implications for governments. Policies that increase Gross Domestic Product while negatively effecting an individual's ability to consume and produce relational goods, may have negative long-term impacts on society as a whole.
The production of relational goods In mainstream economics, the production of commodities employs manufactured capital (tools and implements), natural capital, human capital, and financial capital. All of these contribute to the creation of a good or service valued for its mostly observable physical properties. In contrast, relational goods are produced in sympathetic, empathetic, trusting, and high regard relationships referred to here and by others as social capital. Social capital rich exchange partners exchange what Robison and Flora (2003) refer to as intangible socio-emotional goods (SEGs), which are capable of satisfying socio-emotional needs. When SEGs become embedded in or associated with commodities and other objects, they create an attachment value for the object in addition to its value connected to its physical properties. The result of embedding objects with SEGs is the creation of a relational good referred to as an attachment value good (AVG) that may be tangible or intangible. Though not always called by that name, AVGs are abundant in social life: wedding rings, meaningful songs, family photos, hometowns, artifacts in museums, religious symbols, mementos of emotionally charged experiences, and prized family heirlooms.
Happiness and relational goods In their 2009 paper Income, Relational goods and Happiness, Becchetti, Londono Bedoya and Trovato were able to study 100,000 people from 82 countries and concluded that increased consumption of relational goods is strongly linked to happiness. They were also able to reflect on the "fellow feelings" theory which stated that relational goods increase in their ability to generate happiness with:
Increased time and experiences the interactors share The mutual consent of the interactors This hypothesis suggests that closer, warmer relationships garner more happiness, than colder relationships. They were able to see that time spent with close friends or fellow religious congregation members more strongly increased a person's happiness than did spending time with colleagues outside of working hours. This strengthens the view that time and depth of experience has an impact of the value of a relational good.
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