Wednesday, July 30, 2008

Conspicuous Consumption - or: oh Lord, won't you buy me a mercedes-benz (fg)

Funny post title, but it is true that we all love visible consumption. Just think of the various music clips at MTVin which the peer group sets the standard for demonstrative goods. Research at Chicago Uinversity recently analyzed the realtive contribution of such visible consumption to total consumption. The authors find that corrected for income and wealth differences, consumers in subcultures heavily attach importance to visible goods such as cars, clothing or emblazonment. In particular they acertain that visible goods serve as a signal of individual’s unobserved income and, consequently, social status. This holds especially for low-income peer groups and subcultures like Blacks or Hispanics in which on an individual perspective one major aim is to present the relative richeness. They find that
Blacks spend more on visible goods because their local communities are on average poorer than those of similar Whites. We conclude with an assessment of the role of conspicuous consumption in explaining observed lower spending by racial minorities on items likes health and education, and on lower rates of wealth accumulation for racial minorities.