User:W Lacey UQ/Conspicuous consumption

Examples of Conspicuous Consumption and Product Choice

Conspicuous consumption includes the purchase of goods specifically designed to denote wealth. For example: supercars, technology, and luxury clothing brands.

Paul Newman's Rolex Daytona sold for 17.75 million US dollars in New York on October 26, 2017

Technology

Many technological devices have been marketed as luxury products while essentially offering the same core features as the more basic models. Whilst it could be argued that these devices are the best available on the market, less expensive versions of the same product exist. Acquiring such products, therefore, draws attention to the owners extravagant purchase and creates conversation about the procurement of the item. An example of such a purchase is the sale of Paul Newman's Rolex Daytona, which sold for US$17.75 million in New York on October 26, 2017

Luxury Fashion

Materialistic consumers are likely to engage in conspicuous luxury consumption. The global yearly revenue of the luxury fashion industry was €1.64 trillion in 2019. Buying of conspicuous goods is likely to be influenced by the spending habits of others. This view of luxury conspicuous consumption is being incorporated into social media platforms which is impacting consumer behaviour.

Materialism and Gender

In the article “An examination of materialism, conspicuous consumption and gender differences” (2012), Brenda Segal and Jeffrey S. Podoshen found significant differences between the genders relating to conspicuous consumption, materialism, and impulse buying. The study analysed survey data from 1180 Americans. The results showed that men scored higher for both materialism and conspicuous consumption. The study also suggested that women were more likely to impulse buy. Interestingly, no noteworthy differences were found relating to brand loyalty.

Inequality and Debt

A paper on “Borrowing to Keep Up (with the Joneses): Inequality, Debt, and Conspicuous Consumption” (2020), written by Sheheryar Banuri and Ha Nguyen reported three main findings:

1. Consumption tends to increase when it is conspicuous: signals status and is observable by others
2. When consumption is conspicuous borrowing increases: loans are taken out by individuals lower on the income distribution
3. Access to finance worsens inequality: poorer individuals borrow to signal status, and loan-taking may further increase inequality

These findings show the cyclical effect of costly borrowing and inequality. Lower socioeconomic groups try to match the consumption patterns of those who are wealthier with the main objective of increasing status. Due to access to credit and inequality, personal finance decisions motivated by conspicuous consumption may generate inadvertent macroeconomic volatility. If the distorted personal financial decisions disproportionately affect the poor, inequality could worsen. This study showed evidence supportive of pecuniary emulation and cautioned the use of finance to increase one's social standing. As said by Veblen “Among the motives which lead men to accumulate wealth, the primacy, both in scope and intensity, therefore, continues to belong to this motive of pecuniary emulation” (Veblen, 1899, pg. 27).