Conspicuous consumption
Conspicuous consumption is the spending of money on and the acquiring of luxury goods and services to publicly display economic power of the income or of the accumulated wealth of the buyer. To the conspicuous consumer, such a public display of discretionary economic power is a means of either attaining or maintaining a given social status.
The development of Thorstein Veblen's sociology of conspicuous consumption produced the term invidious consumption, the ostentatious consumption of goods that is meant to provoke the envy of other people; and the term conspicuous compassion, the deliberate use of charitable donations of money in order to enhance the social prestige of the donor, with a display of superior socio-economic status.
History and evolution
The economist and sociologist Thorstein Veblen introduced the term "conspicuous consumption" in 1899 in his book The Theory of the Leisure Class: An Economic Study in the Evolution of Institutions. Veblen described the behavioural characteristics of the nouveau riche social class which emerged as a result of capital accumulation during the Second Industrial Revolution. In that nineteenth-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 social power and prestige, either real or perceived.In the twentieth century the significant improvement of the material standard-of-living of societies and the consequent growth of the middle class saw the term "conspicuous consumption" broadly applied to the men, women, and households who possessed the discretionary income that allowed them to practice the patterns of economic consumption—of goods and services—which were motivated by the desire for prestige, the public display of social status, rather than by the intrinsic, practical utility of the goods and the services proper. In the 1920s economists, such as Paul Nystrom, proposed that changes in the style of life, made feasible by the economics of the industrial age, had induced in the mass of society a "philosophy of futility" that would increase the consumption of goods and services as a social fashion – i.e. an activity done for its own sake. In that context, commentators discuss "conspicuous consumption" either as a behavioural addiction or as a narcissistic behaviour, or as both, emphasising the psychological conditions induced by consumerism—the desire for the immediate gratification of hedonic expectations.
Under Veblen's theory, conspicuous consumption was theorized to comprise socio-economic behaviours practiced by high wealth or high-income people. More recent economic research indicated that conspicuous consumption is in fact less common among the affluent and more common among lower-income groups, regardless of racial or ethnic background, and also common to the societies of countries with emerging economies: "It signals that the owner came from a poor group and has something to prove." In The Millionaire Next Door: The Surprising Secrets of America's Wealthy, Thomas J. Stanley and William D. Danko reported that Americans with a net worth of more than one million dollars are likely to avoid conspicuous consumption, and that millionaires tend to practice frugality - for example, preferring to buy used cars with cash rather than new cars with credit, in order to avoid material depreciation and paying interest for a loan to buy a new car.
Conspicuous compassion, the practice of publicly donating large sums of money to charity to enhance the social prestige of the donor, is sometimes described as a type of conspicuous consumption. 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.
Consumerism theory
As proposed by Thorstein Veblen in the 19th century, conspicuous consumption explains the psychological mechanics of a consumer society, and the increase in the number and the types of the 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, by C. Lury, Consumer Culture and Modernity, by D. Slater, Symbolic Exchange and Death, by Jean Baudrillard, and Spent: Sex, Evolution, and the Secrets of Consumerism, by Geoffrey Miller. Moreover, Hiding in the Light, by D. Hebdige, proposed that conspicuous consumption is a form of displaying a personal identity, and a consequent function of advertising, as proposed in Ads, Fads, and Consumer Culture, by A. A. Berger.
Each variant interpretation and complementary explanation is derived from Thorstein 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 derived the honour of superior social status.
Distinctions of type
- Definitions – The term conspicuous consumption denotes the act of buying many things, especially expensive things, that are not necessary to one's life, done in a way that makes people notice the buyer's having bought the merchandise. In the article "Veblen, Bourdieu, and Conspicuous Consumption", A. Trigg defined conspicuous consumption as the behaviours whereby a man or a woman can display great wealth, by means of idleness—expending much time in the practice of leisure activities, and spending much money to consume luxury goods and services.
- Self-worth – In the book Income, Saving and the Theory of Consumer Behavior, J. S. Duesenberry proposed that a person's conspicuous consumption psychologically depends not only upon the actual level of spending, but also depends upon the degree of his or her spending, as 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 are performed the patterns of conspicuous consumption.
- Aggressive ostentation – In the television report "Aggressive Ostentation", 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 anonymous in and to their societies, which 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.
- Shelter and transport – In the U.S., 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. The negative consequences of either buying or building an oversized house was either the loss of or the reduction of the family's domestic recreational space—the back yard and the front yard; the spending of old-age retirement funds to pay for a too-big house; and 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-trucks, specifically the off-road sport-utility vehicle type, as a form of psychologically comforting conspicuous consumption, because such big motor-vehicles usually are bought by people who reside in a city, an urban nuclear family.
- Prestige – In the article "Status Consumption in Consumer Behaviour: Scale Development and Validation", J.K. Eastman et al. said that status consumption is based upon conspicuous consumption; yet, the literature of contemporary marketing does not establish definitive meanings for the terms status consumption and conspicuous consumption. Moreover, in the article "Status Brands: Examining the Effects of Non-product-related Brand Associations on Status and Conspicuous Consumption", A. O'Cass and H. Frost said that sociologists often incorrectly used the terms "status consumption" and "conspicuous consumption" as interchangeable and equivalent terms. In a later study, O'Cass and Frost determined that, as sociologic constructs, the terms "status consumption" and "conspicuous consumption" denote different sociologic behaviours. About the ambiguities of denotation and connotation of the term "conspicuous consumption", in the article "Conspicuous Consumption: A Literature Review", R. Mason 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 – In the article "Status Consumption in Cross-national Context: Socio–Psychological, Brand and Situational Antecedents", Paurav Shukla said 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, to develop a comprehensive general theory requires that social scientists accept two fundamental assumptions, which usually do not concord. First, though the "rational" and the "irrational" 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 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 elements of the socio-economic phenomenon that is conspicuous consumption.
Criticism
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 goods. In Utility from Accumulation, 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, the economist Robert H. Frank proposed the application of a progressive consumption tax; in the article "The Big City: Rich and Poor, Consumed by Consuming", 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. 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. 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, 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, John Stuart Mill said:
"Conspicuous nonconsumption" is a phrase used to describe a conscious choice to opt out of consumption with the intention of sending deliberate social signals.