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{{short description|Concept in sociology and economy}}
[[File:Veblen3a.jpg|thumb|right|The sociologist and economist [[Thorstein Veblen]] coined the term "conspicuous consumption", and was a pioneer of the [[institutional economics]] movement.]]
{{Anti-consumerism |Theories}}
In sociology and in economics, the term '''conspicuous consumption''' describes and explains the [[consumer]] practice of buying and using goods of a higher quality, [[price]], or in greater quantity than practical.<ref>Phillips, Ronnie J.  2014 April 22. "[https://www.britannica.com/topic/conspicuous-consumption Conspicuous consumption]." ''Encyclopedia Britannica''.</ref> In 1899, the sociologist [[Thorstein Veblen]] coined the term ''conspicuous consumption'' to explain the spending of money on and the acquiring of [[Luxury good|luxury commodities]] (goods and services) specifically as a public display of [[economic power]]—the income and the [[capital accumulation|accumulated wealth]]—of the buyer. To the conspicuous consumer, the public display of [[discretionary income]] is an economic means of either attaining or maintaining a given [[social status]].<ref name="Veblen 1899">{{cite book |last=Veblen |first=Thorstein |title=The Theory of the Leisure Class |url=https://archive.org/details/theoryoftheleisu00833gut |publisher=Project Gutenberg |year=1899}}</ref><ref>''The New Fontana Dictionary of Modern Thought'', Third Edition, Alan Bullock, Stephen Trombley, Eds., 1993, p. 162.</ref>

The development of Veblen's sociology of conspicuous consumption also identified and described other economic behaviours such as '''invidious consumption''', which is the ostentatious consumption of goods, an action meant to provoke the [[envy]] of other people; and '''conspicuous compassion''', the ostentatious use of [[Charity (practice)|charity]] meant to enhance the [[reputation]] and social prestige of the donor;<ref name="West 2004">{{cite book |last=West |first=Patrick |title=Conspicuous Compassion: Why Sometimes It Really Is Cruel To Be Kind |location=London |publisher=Civitas, Institute for the Study of Civil Society |year=2004 |isbn=978-1-903386-34-7 }}</ref> thus the socio-economic practices of [[consumerism]] derive from conspicuous consumption.<ref name=":4">{{Cite web|last=Kenton|first=Will|title=Conspicuous Consumption|url=https://www.investopedia.com/terms/c/conspicuous-consumption.asp|access-date=2021-05-10|website=Investopedia|language=en}}</ref>

==History and development==
In ''[[The Theory of the Leisure Class|The Theory of the Leisure Class: An Economic Study in the Evolution of Institutions]]'' (1899), Thorstein Veblen identified, described, and explained the behavioural characteristics of the ''[[nouveau riche]]'' (new rich) social class that emerged from [[capital accumulation]] during the [[Second Industrial Revolution]] (1860–1914).<ref>Veblen, Thorstein. (1899) ''The Theory of the Leisure Class|Theory of the Leisure Class: An Economic Study in the Evolution of Institutions''. New York: Macmillan. ({{ISBN|0-486-28062-4}}, 1994 Dover pbk ed.; {{ISBN|0-14-018795-2}}, 1994 Penguin Classics ed.).</ref> In that 19th-century social and historical context, the term "conspicuous consumption" applied narrowly in association with the men, women, and families of the [[upper class]] who applied their great wealth as a means of publicly manifesting their [[Power (social and political) |social power]] and [[Social status|prestige]], either real or perceived. The strength of one's reputation is in direct relationship to the amount of money possessed and displayed; that is to say, the basis "of gaining and retaining a good name, are leisure and conspicuous consumption."<ref>Veblen, Thorstein (1912), ''The Theory of the Leisure Class''. New York: Macmillan Company. p. 4.</ref>

In the 1920s, economists such as [[Paul Nystrom]] proposed that changes in lifestyle as result of the [[industrial age]] led to massive expansion of the "[[pecuniary emulation]]."<ref name=":5">{{Cite web|title=Conspicuous Consumption – The Term, The Book, Examples|url=https://conspicuousconsumption.org/|access-date=2021-05-10|language=en-US}}</ref> That conspicuous consumption had induced in the mass of society a "[[philosophy of futility]]" that would increase the consumption of goods and services as a social fashion; consumption for the sake of consumption.

In 1949, [[James Duesenberry]] proposed the "[[demonstration effect]]" and the "[[Bandwagon effect#Microeconomics|bandwagon effect]]", whereby a person's conspicuous consumption psychologically depends upon the actual level of spending, but also depends upon the degree of his or her spending, when compared with and to the spending of other people. That the conspicuous consumer is motivated by the importance, to him or to her, of the opinion of the social and economic reference groups for whom he or she are performed the conspicuous consumption.<ref name=":6" /><ref name=":7" />

===Social class and consumption===
Veblen said that conspicuous consumption comprised socio-economic behaviours practised by rich people as activities usual and exclusive to people with much disposable income;<ref name=":5" /> yet a variation of Veblen's theory is presented in the conspicuous consumption behaviours that are very common to the middle class and to the working class, regardless of the person's race and ethnic group. Such upper-class economic behaviour is especially common in societies with [[Emerging markets|emerging economies]] in which the conspicuous consumption of goods and services ostentatiously signals that the buyer rose from poverty and has something to prove to society.<ref>{{cite web|url= https://www.advertisingbusiness.org/the-complete-consumer-journey-from-initial-need-to-post-purchase-behavior/ |title= The Complete Consumer Journey: From Initial Need to Post-Purchase Behavior }}</ref>

In ''[[The Millionaire Next Door|The Millionaire Next Door: The Surprising Secrets of America's Wealthy]]'' (1996), Thomas J. Stanley and [[William D. Danko]] reported ''conspicuous frugality'', another variation of Veblen's social-class relation to conspicuous consumption. That Americans with a [[net worth]] of more than a million dollars usually avoid conspicuous consumption, and tend to practise [[frugality]], such as paying cash for a used car rather using [[credit]], in order to avoid material [[depreciation]] and paying [[interest]] upon a car loan.<ref>{{Cite book | url=https://books.google.com/books?id=ldpaww5kkmoC | title=The Millionaire Next Door| isbn=9780671015206| last1=Stanley| first1=Thomas J.| last2=Danko| first2=William D.| date=1998|publisher=Simon and Schuster}}</ref>

==Consumerism theory==
Since the 19th century, conspicuous consumption explains the psychology behind the economics of a [[consumer society]], and the increase in the types of goods and services that people consider necessary to and for their lives in a developed economy. Supporting interpretations and explanations of contemporary conspicuous consumption are presented in ''Consumer Culture'' (1996) by Celia Lury,<ref name="Consumer Culture">{{cite book|last = Lury|first = Celia|date =1996|title = Consumer Culture|url = https://archive.org/details/consumerculture0000lury|url-access = registration|publisher = Polity Press |isbn = 9780745614410}}</ref> ''Consumer Culture and Modernity'' (1997) by [[Don Slater]],<ref name="Consumer Culture and Modernity">[[Don Slater|Slater, Don]]. (1997) ''Consumer Culture and Modernity''. London: Polity.</ref> ''Symbolic Exchange and Death'' (1998) by [[Jean Baudrillard]],<ref>Baudrillard, J. (1998b) Symbolic Exchange and Death. London: Sage.</ref> and ''Spent: Sex, Evolution, and the Secrets of Consumerism'' (2009) by [[Geoffrey Miller (evolutionary psychologist)#Evolutionary psychology of consumerism|Geoffrey Miller]].<ref>Miller G, ''Spent: sex, evolution and the secrets of consumerism'', Random House, London, 2009 ({{ISBN|9780670020621}})</ref>

Moreover, D. Hebdige, in ''Hiding in the Light'' (1994), proposes that conspicuous consumption is a form of displaying a [[personal identity]],<ref name="Consumer Culture and Modernity" /><ref>Hebdige, D. (1994) ''Hiding in the Light''. London: Routledge.</ref><ref>Wilson, E. (ed.) ''Chic Thrills. A Fashion Reader''. London: HarperCollins</ref> and a consequent function of [[advertising]], as proposed in ''Ads, Fads, and Consumer Culture'' (2000), by A. A. Berger.<ref>Berger, A. A. (2000) ''Ads, Fads, and Consumer Culture''. Lanham: Rowman and Littlefield.</ref> Each variant interpretation and complementary explanation is derived from Veblen's original sociologic proposition in ''The Theory of the Leisure Class'': that conspicuous consumption is a psychological end in itself, from which the practitioner (man, woman, family) derived the [[honour]] of superior [[social status]].

== Materialism and gender ==
In ''An Examination of Materialism, Conspicuous Consumption and Gender Differences'' (2013), the researchers Brenda Segal and Jeffrey S. Podoshen reported great differences in the consumerism practised by men and women. The data about [[materialism]] and [[impulse purchase]]s of 1,180 Americans indicate that men have greater scores for materialism and conspicuous consumption; and that women tended to buy goods and services on impulse; and both sexes were equally [[Brand loyalty|loyal]] to a given brand of goods and services.<ref name=":0">{{Cite journal|last1=Segal|first1=Brenda|last2=Podoshen|first2=Jeffrey S.|date=March 2013|title=An Examination of Materialism, Conspicuous Consumption and Gender Differences|url=http://doi.wiley.com/10.1111/j.1470-6431.2012.01099.x|journal=International Journal of Consumer Studies|language=en|volume=37|issue=2|pages=189–198|doi=10.1111/j.1470-6431.2012.01099.x}}</ref>

==Distinctions of type==
The term ''conspicuous consumption'' denotes the act of buying something, especially something expensive, that is not necessary to one's life, in a noticeable way.<ref>''Longman American Dictionary'', 2000, p. 296.</ref> Scholar Andrew Trigg (2001) defined ''conspicuous consumption'' as behaviour by which one can display great wealth, by means of idleness—expending much time in the practice of leisure activities, and spending much money to consume [[luxury good]]s and services.<ref>{{cite journal |last=Trigg |first=A. |s2cid=55731706 |year=2001 |title=Veblen, Bourdieu, and conspicuous consumption |journal=Journal of Economic Issues |volume=35 |issue=1 |pages=99–115 |jstor=4227638 |doi=10.1080/00213624.2001.11506342 |url=https://oro.open.ac.uk/89777/1/17F.pdf }}</ref>

'''Conspicuous compassion''', the practice of publicly donating large sums of money to [[Charity (practice)|charity]] to enhance the [[Reputation|social prestige]] of the donor, is sometimes described as a type of conspicuous consumption.<ref name="West 2004" /> This behaviour has long been recognised and sometimes attacked—for example, the [[New Testament]] story ''[[Lesson of the widow's mite]]'' criticises wealthy people who make large donations ostentatiously, while praising poorer people who make small but comparatively more difficult donations in private.<ref>
{{cite book|author=Robert L. Payton and Michael P. Moody|title=Understanding Philanthropy: Its Meaning and Mission|year=2008|isbn=978-0253000132|page=137|publisher=Indiana University Press }}
</ref>

Possible motivations for conspicuous consumption include:
* [[Demonstration effect|Demonstration]]/[[Bandwagon effect#Microeconomics|bandwagon]] effect — In the book ''Income, Saving and the Theory of Consumer Behavior'' (1949), [[James Duesenberry]] proposed that a person's conspicuous consumption psychologically depends not only upon the actual level of spending, but also upon the degree of his or her spending, as compared with the spending of other people. Thus the conspicuous consumer is motivated by the importance, to him or to her, of the opinion of the social and economic reference groups for whom are performed the patterns of conspicuous consumption.<ref name=":6">[[James Duesenberry|Duesenberry, James S]]. (1949), ''Income, Saving and the Theory of Consumer Behavior''. Cambridge, MA: Harvard University Press.</ref><ref name=":7">{{Cite journal | doi=10.1108/10610420810856495 |title = Conspicuous consumption among middle age consumers: Psychological and brand antecedents|journal = Journal of Product & Brand Management|volume = 17|pages = 25–36|year = 2008|last1 = Shukla|first1 = Paurav}}</ref>
* Aggressive ostentation — In a 2006 ''[[Cbsnews.com|CBSNews.com]]'' article, [[Dick Meyer]] said that conspicuous consumption is a form of anger towards society, an "aggressive ostentation" that is an [[antisocial behaviour]], which arose from the [[social alienation]] suffered by men, women, and families who feel they have become [[anonymity|anonymous]] in and to their societies. This feeling of alienation is aggravated by the decay of the [[communitarian]] ethic essential to a person feeling him or herself part of the whole society.<ref name="Aggressive Ostentation">{{cite web|last1=Meyer, Dick|date=2009-02-11|title=Aggressive Ostentation|url=https://www.cbsnews.com/news/aggressive-ostentation/|url-status=live|access-date=2021-05-10|work=CBS News|archive-url=https://web.archive.org/web/20161227200019/http://www.cbsnews.com/news/aggressive-ostentation/ |archive-date=2016-12-27 }}</ref>
* Shelter and transport — In the United States, the trend towards building houses that were larger than needed by a [[nuclear family]] began in the 1950s. Decades later, in the year 2000, that practice of conspicuous consumption resulted in people buying houses that were double the average size needed to comfortably house a nuclear family.<ref name="Monster Homes R Us">{{cite web|last=Lloyd |first=Carol |url=http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2005/10/14/carollloyd.DTL |title=Monster Homes R Us: American homes are monuments to conspicuous consumption|work=SF Chronicle |date=2005-10-14 |access-date=2011-10-20}}</ref> Negative consequences of either buying or building an oversized house might include:
**the loss of or reduction in the family's domestic recreational space—the backyard and the front yard;
**the spending of old-age retirement funds to pay for a too-big house;
**over-long [[commuting]] time, from house to job, and vice versa, because the required plot of land was unavailable near a city.

Oversized houses facilitated other forms of conspicuous consumption, such as an oversized garage for the family's oversized motor vehicles or buying more clothing to fill larger clothes closets. Conspicuous consumption becomes a self-generating cycle of spending money for the sake of social prestige. Analogous to the consumer trend for oversized houses is the trend towards buying oversized [[light truck]]s, specifically the off-road [[sport utility vehicle]] type (cf. [[station wagon]]/[[estate car]]), as a form of psychologically comforting conspicuous consumption, because such large vehicles usually are bought by city-dwellers, an urban nuclear family.<ref name="Monster Homes R Us" />

* [[Prestige (sociology)|Prestige]] – In a 1999 article, Jacqueline Eastman, Ronald Goldsmith, and Leisa Reinecke Flynn said that ''status consumption'' is based upon conspicuous consumption; however, the literature of contemporary [[marketing]] does not establish definitive meanings for the terms ''status consumption'' and ''conspicuous consumption''.<ref>{{cite journal|last1=Eastman, Jacqueline K., Ronald Goldsmith, and Leisa Reinecke Flynn|year=1999|title=Status Consumption in Consumer Behaviour: Scale Development and Validation|journal=Journal of Marketing Theory and Practice|volume=7|issue=3|pages=41–51|doi=10.1080/10696679.1999.11501839}}</ref><ref name="Shukla2">{{Cite podcast|url=http://www.pauravshukla.com/status-luxury-consumption-among-british-and-indian-consumers| title = Status (luxury) consumption among British and Indian consumers| website =Paurav Shukla| publisher =International Marketing Review| host =Shukla, Paurav| date =2010-01-09| access-date =2011-10-20}}</ref> Moreover, A. O'Cass and H. Frost (2002) claim that sociologists often incorrectly used the two terms as interchangeable and equivalent terms. In a later study, O'Cass and Frost determined that, as sociological constructs, the terms ''status consumption'' and ''conspicuous consumption'' denote different sociological behaviours.<ref>{{cite journal |last1=O'Cass |first1=A. |last2=Frost |first2=H. |year=2002 |title=Status Brands: Examining the Effects of Non-product-related Brand Associations on Status and Conspicuous Consumption |journal=Journal of Product & Brand Management |volume=11 |issue=2 |pages=67–88 |doi=10.1108/10610420210423455}}</ref> About the ambiguities of denotation and connotation of the term ''conspicuous consumption'', R. Mason (1984) reported that the classical, general theories of consumer decision-processes do not readily accommodate the construct of "conspicuous consumption", because the nature of said socio-economic behaviours varies according to the social class and the economic group studied.<ref>{{cite journal |last=Mason |first=R. |year=1984 |title=Conspicuous Consumption: A Literature Review |journal=European Journal of Marketing |volume=18 |issue=3 |pages=26–39 |doi=10.1108/eum0000000004779}}</ref>
* Motivations – Paurav Shukla (2010) says that, whilst marketing and sales researchers recognise the importance of the buyer's social and psychological environment, the definition of the term ''status-directed consumption'' remains ambiguous, because the development of a comprehensive general theory requires that social scientists accept two fundamental assumptions, which usually do not concord. First, though the "rational" (economic) and the "irrational" (psychologic) elements of consumer decision-making often influence a person's decision to buy particular goods and services, marketing and sales researchers usually consider the rational element dominant in a person's decision to buy the particular goods and services. Second, the consumer perceives the [[utility]] of the product (the goods, the services) as a prime consideration in evaluating its usefulness, i.e. the ''reason'' to buy the product.<ref>{{cite journal |last=Shukla |first=P. |year=2010 |title=Status Consumption in Cross-national Context: Socio-psychological, Brand and Situational Antecedents |journal=International Marketing Review |volume=27 |issue=1 |pages=108–129 |doi=10.1108/02651331011020429 }}</ref> These assumptions, required for the development of a general theory of brand selection and brand purchase, are problematic, because the resultant theories tend either to misunderstand or to ignore the "irrational" element in the behaviour of the buyer-as-consumer; and because conspicuous consumption is a behaviour predominantly "psychological" in motivation and expression, Therefore, a comprehensive, general theory of conspicuous consumption would require a separate construct for the psychological (irrational) elements of the socio-economic phenomenon that is conspicuous consumption.

== Examples ==
Conspicuous consumption is exemplified by purchasing goods that are exclusively designed to serve as symbols of wealth, such as [[Luxury brand|luxury-brand]] clothing, [[High tech|high-tech]] tools, and vehicles.<ref name=":4" />

=== Luxury fashion ===
Materialistic consumers are likely to engage in conspicuous luxury consumption.<ref name=":2">{{Cite journal|last1=Charoennan|first1=Wanwisa|last2=Huang|first2=Kai-Ping|date=2018|title=THE ANTECEDENTS AND CONSEQUENCES OF CONSPICUOUS CONSUMPTION OF LUXURY FASHION GOODS IN A SOCIAL MEDIA PLATFORM|journal=International Journal of Organizational Innovation|volume=11|pages=1–21}}</ref> The global yearly revenue of the luxury fashion industry was €1.64 trillion in 2019.<ref>{{Citation|last=Cabigiosu|first=Anna|title=Digitalization in the Luxury Fashion Industry |chapter=An Overview of the Luxury Fashion Industry |date=2020|url= |series=Palgrave Advances in Luxury|pages=9–31|place=Cham|publisher=Springer International Publishing|language=en|doi=10.1007/978-3-030-48810-9_2|isbn=978-3-030-48809-3|pmc=7355146}}</ref> 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]].<ref name=":2" /> During periods of economic downturn, consumers tend to turn away from "logomania" products and instead purchase luxury goods that signal affluence more subtly.<ref>{{Cite news |last=McLauchlan |first=Paul |date=April 25, 2023 |title=Economic Uncertainty Is Driving Demand for 'Quiet Luxury' — But Will it Last? |language=en |work=Fashionista |url=https://fashionista.com/2023/04/wearable-fashion-quiet-luxury-fall-2023-fashion-week-trend |access-date=2023-11-09}}</ref>

==Criticism==
In 1919, the journalist [[H. L. Mencken]] addressed the sociological and psychological particulars of the socio-economic behaviours that are conspicuous consumption, by asking:<blockquote>Do I enjoy a decent bath because I know that John Smith cannot afford one—or because I delight in being clean? Do I admire [[Beethoven's Fifth Symphony]] because it is incomprehensible to Congressmen and Methodists—or because I genuinely love music? Do I prefer [[terrapin à la Maryland]] to fried liver because plowhands must put up with the liver—or because the terrapin is intrinsically a more charming dose? Do I prefer kissing a pretty girl to kissing a [[charwoman]], because even a janitor may kiss a charwoman—or because the pretty girl looks better, smells better, and kisses better?<ref name="Aggressive Ostentation" /><ref>{{cite book |last1=Mencken |first1=Henry Louis |title=Prejudices, First Series |date=1919 |publisher=[[Alfred A. Knopf]] |location=New York |url=https://www.gutenberg.org/files/53538/53538-h/53538-h.htm}}</ref></blockquote>

=== Inequality and debt ===

In ''The Theory of the Leisure Class'' (1899) Veblen said that "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 of the rich".<ref name="Veblen 1899"/> In the study "Borrowing to Keep Up (with the Joneses): Inequality, Debt, and Conspicuous Consumption" (2020), Sheheryar Banuri and Ha Nguyen reported three findings:

* Consumption tends to increase when the buying and the using of goods and services is conspicuous: Consumption signals status to other people.
* Conspicuous consumption increases the frequency of borrowing money: Poor people take out loans in order to compete at consumption.
* [[Economic inequality]] is worsened with access to credit: Poor people borrow money in order to signal status, which becomes a vicious circle.<ref name=":3">{{Cite journal|last1=Sheheryar|first1=Banuri|last2=Ha|first2=Nguyen|date=2020|title=Borrowing to Keep Up (with the Joneses): Inequality, Debt, and Conspicuous Consumption|url=https://openknowledge.worldbank.org/handle/10986/34351|journal=Policy Research Working Paper|doi=10.1596/1813-9450-9354 |language=English|via=World Bank Group|hdl=10986/34351|hdl-access=free}}</ref>

The findings that Banuri and Nguyen reported indicate that the cyclical effect of borrowing money for conspicuous consumption leads to and perpetuates economic inequality. That poor people imitate, try to match, and emulate the [[consumption (economics)|consumption]] patterns of rich people in order to increase their social status, and perhaps rise in society. That such socio-economic behaviours, facilitated by easy access to credit, generate macroeconomic volatility and support Veblen's concept of [[The Theory of the Leisure Class|pecuniary emulation]] used to finance a person's social standing.<ref name=":3" />

Other research supports these and similar results. For example income inequality has been found to be associated with reduced savings rates.<ref>Michael Kumhof, Romain Rancière, and Pablo Winant, "Inequality, Leverage, and Crises", American Economic Review 105, no. 3 (March 2015): 1217–45, https://doi.org/10.1257/aer.20110683</ref><ref>Michael Kumhof et al., "Income Inequality and Current Account Imbalances” (IMF, 2012), http://ideas.repec.org/p/imf/imfwpa/12-8.html {{Webarchive|url=https://web.archive.org/web/20190421210115/https://ideas.repec.org/p/imf/imfwpa/12-8.html |date=2019-04-21 }}</ref><ref>Christopher Brown, Inequality, Consumer Credit and the Savings Puzzle (Cheltnham: Edward Elgar, 2008)</ref> One hypothesized mechanism for this relationship is 'expenditure cascades'<ref>Robert H. Frank, Adam Seth Levine, and Oege Dijk, "Expenditure Cascades", Review of Behavioral Economics 1, no. 1–2 (January 15, 2014): 55–73, https://doi.org/10.1561/105.00000003.</ref> whereby consumption norms are set by the relatively wealthy, who then have more income and consumption relative to others as inequality rises. This emulation of the consumption norms of relatively wealthy peers is supported by a large literature.<ref>Moritz Drechsel-Grau and Kai D. Schmid, "Consumption–Savings Decisions under Upward-Looking Comparisons", Journal of Economic Behavior & Organization 106 (October 1, 2014): 254–68, https://doi.org/10.1016/j.jebo.2014.07.006</ref><ref>Francisco Alvarez-Cuadrado, Jose Maria Casado, and Jose Maria Labeaga, "Envy and Habits: Panel Data Estimates of Interdependent Preferences", Oxford Bulletin of Economics and Statistics 78, no. 4 (August 1, 2016): 443–69, https://doi.org/10.1111/obes.12111</ref><ref>Marianne Bertrand and Adair Morse, "Trickle-Down Consumption", Working Paper (National Bureau of Economic Research, March 2013), http://www.nber.org/papers/w18883</ref><ref>Peter Kuhn et al., "The Effects of Lottery Prizes on Winners and Their Neighbors: Evidence from the Dutch Postcode Lottery", American Economic Review 101, no. 5 (August 2011): 2226–47, https://doi.org/10.1257/aer.101.5.2226</ref><ref>Marianne Bertrand and Adair Morse, "Consumption Contagion: Does the Consumption of the Rich Drive the Consumption of the Less Rich?.", 2011, faculty.haas.berkeley.edu/morse/research/papers/NBER_reporter_summaryAug2011.pdf</ref><ref>Rachel E. Dwyer, "The McMansionization of America? Income Stratification and the Standard of Living in Housing, 1960-2000", Research in Social Stratification and Mobility 27, no. 4 (December 2009): 285–300, https://doi.org/doi: 10.1016/j.rssm.2009.09.003</ref><ref>Bill Dupor and Wen-Fang Liu, "Jealousy and Equilibrium Overconsumption", American Economic Review 93, no. 1 (2003): 423–28</ref><ref>H. L. Cole, G. J. Mailath, and A. Postlewaite, "Social Norms, Savings Behavior, and Growth", Journal of Political Economy 100, no. 6 (1992): 1092–1127.</ref> 

One complication found in the macro literature is that the link between inequality and savings may depend on context, in particular on the degree of financialisation. When the degree of financialisation is high, inequality tends to reduce the national savings rate as the emulation effect is more powerful when finance is readily available, but the opposite effect may occur when financialisation is low as the emulation effect is weak, and the rich tend to save at a higher rate than the poor.<ref>Peter Bofinger and Philipp Scheuermeyer, "Income Distribution and Aggregate Saving: A Non-Monotonic Relationship", CEPR Discussion Papers (C.E.P.R. Discussion Papers, August 2016), https://ideas.repec.org/p/cpr/ceprdp/11435.html</ref> The effect of inequality on savings is also found to be positive in Asia, where financialization is lower.<ref>inhua Gu et al., "Inequality and Saving: Further Evidence from Integrated Economies", Review of Development Economics 19, no. 1 (February 1, 2015): 15–30, https://doi.org/10.1111/rode.12125</ref><ref>Baomin Dong, and Bihong Huang, "Inequality, Saving and Global Imbalances: A New Theory with Evidence from OECD and Asian Countries", The World Economy 38, no. 1 (January 1, 2015): 110–35, https://doi.org/10.1111/twec.12188.</ref> The relationship is also found to depend on economic policy and institutions. For example inequality appears to lower savings in [[Market Economy|market economies]] but to rather reduce aggregate demand in [[Planned Economy|planned economies]].<ref>Jan Behringer and Till van Treeck, "Varieties of Capitalism and Growth Regimes: The Role of Income Distribution", IMK Working Paper, IMK Working Paper (IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute, 2018), https://ideas.repec.org/p/imk/wpaper/194-2018.html</ref>  

In the case where inequality lowers savings, and increases leverage and a tendency to run large current account imbalances via the expenditure cascade mechanism, this has been associated with more frequent and/or severe economic crisis.<ref>Cristiano Perugini, Jens Hölscher, and Simon Collie, "Inequality, Credit and Financial Crises", Cambridge Journal of Economics 40, no. 1 (January 1, 2016): 227–57, https://doi.org/10.1093/cje/beu075</ref><ref> Malinen, "Does Income Inequality Contribute to Credit Cycles?", Journal of Economic Inequality 14, no. 3 (2016): 309–25, https://doi.org/10.1007/s10888-016-9334-6</ref><ref> J. Michell, "Income Distribution and the Financial and Economic Crisis", in The Demise of Finance-Dominated Capitalism: Explaining the Financial and Economic Crises, ed. Eckhard Hein, Daniel Detzer, and Nina Dodig (Cheltenham, UK ; Northampton, MA, USA: Edward Elgar Pub, 2015)</ref><ref>Michael Kumhof, Romain Rancière, and Pablo Winant, "Inequality, Leverage, and Crises", American Economic Review 105, no. 3 (March 2015): 1217–45, https://doi.org/10.1257/aer.20110683</ref><ref>Michael Kumhof, Romain Ranciere, and Pablo Winant, "Inequality, Leverage and Crises; The Case of Endogenous Default", IMF Working Papers (International Monetary Fund, December 17, 2013), https://ideas.repec.org/p/imf/imfwpa/13-249.html {{Webarchive|url=https://web.archive.org/web/20180918111455/https://ideas.repec.org/p/imf/imfwpa/13-249.html |date=2018-09-18 }}</ref><ref>Fadhel Kaboub, Zdravka Todorova, and Luisa Fernandez, "Inequality-Led Financial Instability", International Journal of Political Economy 39, no. 1 (Spring 2010): 3–27</ref><ref>Richard Breen and Cecilia García-Peñalosa, "Income Inequality and Macroeconomic Volatility: An Empirical Investigation", Review of Development Economics 9, no. 3 (2005): 380–98</ref><ref>Andrew G. Berg and Jonathan D. Ostry, "Inequality and Unsustainable Growth: Two Sides of the Same Coin?", IMF Staff Discussion Notes (IMF, April 8, 2011), http://www.imf.org/external/pubs/ft/sdn/2011/sdn1108.pdf.</ref>

== Solutions ==
In the case of conspicuous consumption, [[Luxury tax|taxes upon luxury goods]] diminish societal expenditures on high-status goods, by rendering them more expensive than non-positional goods. In this sense, luxury taxes can be seen as a [[Pigouvian tax]] correcting [[market failure]]—with an apparent negative [[deadweight loss]], these taxes are a more efficient mechanism for increasing revenue than 'distorting' labour or capital taxes.<ref>{{cite journal|last=Ng|first=Yew-Kwang|year=1987|title=Diamonds Are a Government's Best Friend: Burden-Free Taxes on Goods Valued for Their Values|journal=[[American Economic Review]]|volume=77|issue=1|pages=186–191|jstor=1806737}}</ref> A [[luxury tax]] applied to goods and services for conspicuous consumption is a type of progressive [[sales tax]] that at least partially corrects the negative [[externality]] associated with the conspicuous consumption of [[positional good]]s.<ref>{{cite journal |first=Daniel |last=Sámano |title=Optimal Linear Taxation of Positional Goods |journal=Working Paper |location=University of Minnesota |year=2009 |url=http://dsamano.weebly.com/uploads/1/2/8/7/1287492/draftlux05.pdf }}</ref> In ''Utility from Accumulation'' (2009), Louis Kaplow said that assets exercise an objective social-utility function, i.e. the rich man and the rich woman hoard material assets, because the hoard, itself, functions as status goods that establish his and her socio-economic position within society.<ref>{{Cite journal|doi=10.3386/w15595|title=Utility from Accumulation|year=2009|last1=Kaplow|first1=L.|doi-access=free}}</ref> When utility is derived directly from accumulation of assets, this lowers the dead weight loss associated with inheritance taxes and raises the optimal rate of inheritance taxation.<ref>{{Cite journal | doi = 10.1093/cesifo/ifr014| title = The Tax Treatment of Intergenerational Wealth Transfers| journal = CESifo Economic Studies| volume = 57| issue = 2| pages = 365–401| year = 2011| last1 = Cremer | first1 = H.| last2 = Pestieau | first2 = P.| url = https://orbi.uliege.be/bitstream/2268/118992/1/cesifo.ifr014.full.pdf}}</ref>

[[File:John Stuart Mill by John Watkins, 1865.jpg|thumb|right|300px|In the 19th century, the philosopher John Stuart Mill recommended [[Luxury tax|taxing]] the practice of conspicuous consumption.]]

In place of luxury taxes, economist [[Robert H. Frank]] proposed the application of a progressive consumption tax; in a 1998 ''[[The New York Times|New York Times]]'' article, [[John Tierney (journalist)|John Tierney]] said that as a remedy for the social and psychological malaise that is conspicuous consumption, the personal [[income tax]] should be replaced with a [[progressive tax]] upon the yearly sum of [[discretionary income]] spent on the conspicuous consumption of goods and services.<ref name="The Big City">{{cite news |last=Tierney |first=John |url=https://www.nytimes.com/1998/11/30/nyregion/the-big-city-rich-and-poor-consumed-by-consuming.html |title=The Big City; Rich and Poor, Consumed By Consuming |newspaper=The New York Times|date=1998-11-30|access-date=2011-10-20}}</ref> Another option is the [[redistribution of wealth]], either by means of an [[incomes policy]] – for example the conscious efforts to promote [[wage compression]] under variants of [[social corporatism]] such as the [[Rehn–Meidner model]] and/or by some mix of progressive taxation and transfer policies, and provision of public goods. When individuals are concerned with their relative income or consumption in comparison to their peers, the optimal degree of public good provision and of progression of the tax system is raised.<ref>{{cite journal |first=L. |last=Micheletto |title=Optimal Nonlinear Redistributive Taxation and Public Good Provision in an Economy with Veblen Effects |journal=Journal of Public Economic Theory |volume=13 |issue=1 |year=2011 |pages=71–96 |doi=10.1111/j.1467-9779.2010.01493.x |url=http://uu.diva-portal.org/smash/get/diva2:211325/FULLTEXT01 |doi-access=free }}</ref><ref>{{cite journal |first1=Michael J. |last1=Boskin |first2=Eytan |last2=Sheshinski |title=Optimal Redistributive Taxation When Individual Welfare Depends Upon Relative Income |journal=[[Quarterly Journal of Economics]] |volume=92 |issue=4 |year=1978 |pages=589–601 |jstor=1883177 |doi=10.2307/1883177}}</ref><ref>{{cite journal |first1=Thomas |last1=Aronsson |first2=Olof |last2=Johansson-Stenman |title=When the Joneses' Consumption Hurts: Optimal Public Good Provision and Nonlinear Income Taxation |journal=[[Journal of Public Economics]] |volume=92 |issue=5–6 |year=2008 |pages=986–997 |doi=10.1016/j.jpubeco.2007.12.007 }}</ref> Because the activity of conspicuous consumption, itself, is a form of [[superior good]], diminishing the [[income inequality]] of the [[income distribution]] by way of an [[egalitarian]] policy reduces the conspicuous consumption of positional goods and services. In ''Wealth and Welfare'' (1912), the economist [[A. C. Pigou]] said that the redistribution of wealth might lead to great gains in [[Social welfare function|social welfare]]:

{{Quotation| Now the part played by comparative, as distinguished from absolute, income is likely to be small for incomes that only suffice to provide the necessaries and primary comforts of life, but to be large with large incomes. In other words, a larger proportion of the satisfaction yielded by the incomes of rich people comes from their relative, rather than from their absolute, amount. This part of it will not be destroyed if the incomes of all rich people are diminished together. The loss of economic welfare suffered by the rich when command over resources is transferred from them to the poor will, therefore, be substantially smaller relatively to the gain of economic welfare to the poor than a consideration of the law of diminishing utility taken by itself suggests.<ref>{{cite book |first=Arthur Cecil |last=Pigou |title=Wealth and Welfare |url=https://archive.org/details/in.ernet.dli.2015.187653 |year=1912 }}</ref>}}

The economic case for the taxation of positional, luxury goods has a long history; in the mid-19th century, in ''[[Principles of Political Economy]] with some of their Applications to Social Philosophy'' (1848), [[John Stuart Mill]] said:

{{Quotation|I disclaim all asceticism, and by no means wish to see discouraged, either by law or opinion, any indulgence which is sought from a genuine inclination for, any enjoyment of, the thing itself; but a great portion of the expenses of the higher and middle classes in most countries&nbsp;... is not incurred for the sake of the pleasure afforded by the things on which the money is spent, but from regard to opinion, and an idea that certain expenses are expected from them, as an appendage of station; and I cannot but think that expenditure of this sort is a most desirable subject of taxation. If taxation discourages it, some good is done, and if not, no harm; for in so far as taxes are levied on things which are desired and possessed from motives of this description, nobody is the worse for them. When a thing is bought not for its use but for its costliness, cheapness is no recommendation.<ref>John Stuart Mill, ''Principles of Political Economy with some of their Applications to Social Philosophy'', book 5, ch. 6, pt. 7 (W. J. Ashley, ed., Longmans, Green & Co. 1909) (1848)</ref>}}

In the case where conspicuous consumption mediates a link between inequality and unsustainable borrowing, one suggested policy response is tighter financial regulation.<ref>Joshua Aizenman, Menzie D. Chinn, and Hiro Ito, "Financial Spillovers and Macroprudential Policies", Working Paper (National Bureau of Economic Research, December 2017), https://doi.org/10.3386/w24105 </ref><ref>Joseph E Stiglitz, "New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part IV: Land and Credit", Working Paper (National Bureau of Economic Research, May 2015), https://doi.org/10.3386/w21192.</ref>

"Conspicuous non-consumption" is a phrase used to describe a conscious choice to opt out of consumption with the intention of sending deliberate social signals.<ref>{{cite journal |last1=Sørensen |first1=Elin Brandi |last2=Hjalager |first2=Anne-Mette |title=Conspicuous non-consumption in tourism: Non-innovation or the innovation of nothing? |journal=Tourist Studies |date=19 December 2019 |volume=20 |issue=2 |pages=222–247 |doi=10.1177/1468797619894463|s2cid=213042469 |url=https://findresearcher.sdu.dk:8443/ws/files/170914232/Brandi_S_rensen_and_Hjalager._Conspicuous_Non_consumption_in_Tourism._Tourism_Studies._2020.pdf }}</ref><ref>{{cite journal |last1=Portwood-Stacer |first1=Laura |title=Media refusal and conspicuous non-consumption: The performative and political dimensions of Facebook abstention |journal=New Media & Society |date=5 December 2012 |volume=15 |issue=7 |pages=1041–1057 |doi=10.1177/1461444812465139|s2cid=40206877 }}</ref>

==See also==
<!--please help to rationalize this list, it must not be a rag-bag of vaguely-related items-->
{{cols|colwidth=13em}}
* [[Affluenza]]
* [[Anti-consumerism]]
* [[Bling]]
* [[Class consciousness]]
* [[Commodity fetishism]]
* [[Conspicuous conservation]]
* [[Conspicuous leisure]]
* [[Costly signaling theory in evolutionary psychology]]
* [[Elitism]]
* [[Frugality]]
* [[Giffen good]]
* [[Handicap principle]]
* [[Haul video]]
* [[Hoarding]]
* [[Izikhothane]]
* [[Keeping up with the Joneses]]
* [[Economic materialism|Materialism]]
* [[Mottainai]]
* [[Post-purchase rationalization]]
* [[Potlatch]]
* [[Pricing#Premium pricing|Prestige pricing]]
* [[Sign value]]
* [[Signalling theory]]
* [[Simple living]]
* [[Status symbol]]
* [[Structural functionalism]]
* [[Sumptuary law]]
* [[Sumptuary taxes]]
* [[Surplus economics]]
* [[Veblen good]]
{{colend}}

==References==
{{Reflist|30em}}

==Further reading==
{{wiktionary}}
* {{gutenberg|no=833|name=Theory of the Leisure Class |author= Thorstein Veblen|date=1899}}
* [https://sourcebooks.fordham.edu/mod/1902veblen00.asp Thorstein Veblen: Conspicuous Consumption, 1902] at Fordham University's "Modern History Sourcebook"
* [https://web.archive.org/web/20190623171545/https://www2.gwu.edu/~ccps/etzioni/B117.pdf The Good Life: An International Perspective], a short article by [[Amitai Etzioni]]
<!-- these external links are just examples of CC
==External links==

* [http://www.latimes.com/news/local/la-me-toystoreshooting29-2008nov29,0,5989270.story Conspicuous consumption at its worst ... shooting at Toys R Us on Black Friday] (2008), ''[[Los Angeles Times]]''
* [https://www.nytimes.com/2008/11/29/business/29walmart.html?hp Wal-Mart employee trampled to death by shoppers hungry for deals] (2008), ''[[New York Times]]''
*[http://www.marketwatch.com/story/10-obscene-displays-of-wealth-that-shock-average-americans-2016-09-22 10 obscene displays of wealth] (Sept 2016), ''[[MarketWatch]]''
-->

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{{Thorstein Veblen}}
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[[Category:Anti-corporate activism]]
[[Category:Consumerism]]
[[Category:Consumption]]
[[Category:Institutional economics]]
[[Category:Narcissism]]
[[Category:Socio-economic mobility]]
[[Category:Thorstein Veblen]]