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In sociology and in economics, the term conspicuous consumption describes and explains the practice of buying and using goods of a higher quality, , or in greater quantity than practical.Phillips, Ronnie J. 2014 April 22. " Conspicuous consumption." Encyclopedia Britannica. In 1899, the sociologist coined the term conspicuous consumption to explain the spending of money on and the acquiring of (goods and services) specifically as a public display of —the income and the 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 . The New Fontana Dictionary of Modern Thought, Third Edition, Alan Bullock, Stephen Trombley, Eds., 1993, p. 162.

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 of other people; and conspicuous compassion, the ostentatious use of charity meant to enhance the and social prestige of the donor;

(2025). 9781903386347, Civitas, Institute for the Study of Civil Society.
thus the socio-economic practices of derive from conspicuous consumption.

History and development
In (1899), Thorstein Veblen identified, described, and explained the behavioural characteristics of the (new rich) social class that emerged from capital accumulation during the Second Industrial Revolution (1860–1914).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. (, 1994 Dover pbk ed.; , 1994 Penguin Classics ed.). In that 19th-century social and historical context, the term "conspicuous consumption" applied narrowly in association with the men, women, and families of the who applied their great wealth as a means of publicly manifesting their social power and , 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."Veblen, Thorstein (1912), The Theory of the Leisure Class. New York: Macmillan Company. p. 4.

In the 1920s, economists such as proposed that changes in lifestyle as result of the led to massive expansion of the "pecuniary emulation." 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", 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.

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; 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 in which the conspicuous consumption of goods and services ostentatiously signals that the buyer rose from poverty and has something to prove to society.

In (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 of more than a million dollars usually avoid conspicuous consumption, and tend to practise , such as paying cash for a used car rather using , in order to avoid material and paying upon a car loan.

(1998). 9780671015206, Simon and Schuster. .

Consumerism theory
Since the 19th century, conspicuous consumption explains the psychology behind the economics of a , 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,
(1996). 9780745614410, Polity Press. .
Consumer Culture and Modernity (1997) by ,. (1997) Consumer Culture and Modernity. London: Polity. Symbolic Exchange and Death (1998) by ,Baudrillard, J. (1998b) Symbolic Exchange and Death. London: Sage. and Spent: Sex, Evolution, and the Secrets of Consumerism (2009) by Geoffrey Miller.Miller G, Spent: sex, evolution and the secrets of consumerism, Random House, London, 2009 ()

Moreover, D. Hebdige, in Hiding in the Light (1994), proposes that conspicuous consumption is a form of displaying a personal identity,Hebdige, D. (1994) Hiding in the Light. London: Routledge.Wilson, E. (ed.) Chic Thrills. A Fashion Reader. London: HarperCollins and a consequent function of , as proposed in Ads, Fads, and Consumer Culture (2000), by A. A. Berger.Berger, A. A. (2000) Ads, Fads, and Consumer Culture. Lanham: Rowman and Littlefield. 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 of superior .

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 and 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 to a given brand of goods and services.

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. Longman American Dictionary, 2000, p. 296. 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 and services.

Conspicuous compassion, the practice of publicly donating large sums of money to charity to enhance the of the donor, is sometimes described as a type of conspicuous consumption. This behaviour has long been recognised and sometimes attacked—for example, the 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.

(2025). 9780253000132, Indiana University Press.

Possible motivations for conspicuous consumption include:

  • Demonstration/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.Duesenberry, James S. (1949), Income, Saving and the Theory of Consumer Behavior. Cambridge, MA: Harvard University Press.
  • Aggressive ostentation — In a 2006 CBSNews.com article, 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 in and to their societies. This feeling of alienation is aggravated by the decay of the ethic essential to a person feeling him or herself part of the whole society.
  • Shelter and transport — In the United States, the trend towards building houses that were larger than needed by a 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. 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 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 , specifically the off-road sport utility vehicle type (cf. /), as a form of psychologically comforting conspicuous consumption, because such large vehicles usually are bought by city-dwellers, an urban nuclear family.

  • 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 does not establish definitive meanings for the terms status consumption and conspicuous consumption. 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. 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.
  • 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 of the product (the goods, the services) as a prime consideration in evaluating its usefulness, i.e. the reason to buy the product. 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 clothing, tools, and vehicles.

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. During periods of economic downturn, consumers tend to turn away from "logomania" products and instead purchase luxury goods that signal affluence more subtly.

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:
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 , because even a janitor may kiss a charwoman—or because the pretty girl looks better, smells better, and kisses better?

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". 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.

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 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 pecuniary emulation used to finance a person's social standing.

Other research supports these and similar results. For example income inequality has been found to be associated with reduced savings rates.Michael Kumhof, Romain Rancière, and Pablo Winant, "Inequality, Leverage, and Crises" Https://doi.org/10.1257/aer.20110683< /ref>Michael Kumhof et al., "Income Inequality and Current Account Imbalances” (IMF, 2012), http://ideas.repec.org/p/imf/imfwpa/12-8.html Christopher Brown, Inequality, Consumer Credit and the Savings Puzzle (Cheltnham: Edward Elgar, 2008) One hypothesized mechanism for this relationship is 'expenditure cascades'Robert H. Frank, Adam Seth Levine, and Oege Dijk, "Expenditure Cascades" 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.Moritz Drechsel-Grau and Kai D. Schmid, "Consumption–Savings Decisions under Upward-Looking Comparisons" Https://doi.org/10.1016/j.jebo.2014.07.006< /ref>Francisco Alvarez-Cuadrado, Jose Maria Casado, and Jose Maria Labeaga, "Envy and Habits: Panel Data Estimates of Interdependent Preferences" Https://doi.org/10.1111/obes.12111< /ref>Marianne Bertrand and Adair Morse, "Trickle-Down Consumption", Working Paper (National Bureau of Economic Research, March 2013), http://www.nber.org/papers/w18883Peter Kuhn et al., "The Effects of Lottery Prizes on Winners and Their Neighbors: Evidence from the Dutch Postcode Lottery" Https://doi.org/10.1257/aer.101.5.2226< /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.pdfRachel E. Dwyer, "The McMansionization of America? Income Stratification and the Standard of Living in Housing, 1960-2000" Https://doi.org/doi: 10.1016/j.rssm.2009.09.003Bill Dupor and Wen-Fang Liu, "Jealousy and Equilibrium Overconsumption", American Economic Review 93, no. 1 (2003): 423–28H. L. Cole, G. J. Mailath, and A. Postlewaite, "Social Norms, Savings Behavior, and Growth", Journal of Political Economy 100, no. 6 (1992): 1092–1127.

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.Peter Bofinger and Philipp Scheuermeyer, "Income Distribution and Aggregate Saving: A Non-Monotonic Relationship" 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.inhua Gu et al., "Inequality and Saving: Further Evidence from Integrated Economies" Https://doi.org/10.1111/rode.12125< /ref>Baomin Dong, and Bihong Huang, "Inequality, Saving and Global Imbalances: A New Theory with Evidence from OECD and Asian Countries" 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 but to rather reduce aggregate demand in .Jan Behringer and Till van Treeck, "Varieties of Capitalism and Growth Regimes: The Role of Income Distribution" 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.Cristiano Perugini, Jens Hölscher, and Simon Collie, "Inequality, Credit and Financial Crises" Https://doi.org/10.1093/cje/beu075< /ref> Malinen, "Does Income Inequality Contribute to Credit Cycles?" Https://doi.org/10.1007/s10888-016-9334-6< /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)Michael Kumhof, Romain Rancière, and Pablo Winant, "Inequality, Leverage, and Crises" Https://doi.org/10.1257/aer.20110683< /ref>Michael Kumhof, Romain Ranciere, and Pablo Winant, "Inequality, Leverage and Crises; The Case of Endogenous Default" Https://ideas.repec.org/p/imf/imfwpa/13-249.html Fadhel Kaboub, Zdravka Todorova, and Luisa Fernandez, "Inequality-Led Financial Instability", International Journal of Political Economy 39, no. 1 (Spring 2010): 3–27Richard Breen and Cecilia García-Peñalosa, "Income Inequality and Macroeconomic Volatility: An Empirical Investigation", Review of Development Economics 9, no. 3 (2005): 380–98Andrew 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.

Solutions
In the case of conspicuous consumption, 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 correcting —with an apparent negative , these taxes are a more efficient mechanism for increasing revenue than 'distorting' labour or capital taxes. A applied to goods and services for conspicuous consumption is a type of progressive that at least partially corrects the negative associated with the conspicuous consumption of . 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. 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.

In place of luxury taxes, economist Robert H. Frank proposed the application of a progressive consumption tax; in a 1998 New York Times article, John Tierney said that as a remedy for the social and psychological malaise that is conspicuous consumption, the personal should be replaced with a upon the yearly sum of discretionary income spent on the conspicuous consumption of goods and services. Another option is the redistribution of wealth, either by means of an – for example the conscious efforts to promote 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. Because the activity of conspicuous consumption, itself, is a form of , diminishing the income inequality of the income distribution by way of an 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:

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:

In the case where conspicuous consumption mediates a link between inequality and unsustainable borrowing, one suggested policy response is tighter financial regulation.Joshua Aizenman, Menzie D. Chinn, and Hiro Ito, "Financial Spillovers and Macroprudential Policies" Https://doi.org/10.3386/w24105 Joseph E Stiglitz, "New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part IV: Land and Credit" 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.

See also

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