Wealth and Want: Income Inequality and Demand for Luxury Goods in the United States
22 Pages Posted: 16 Feb 2023 Last revised: 20 Feb 2024
Date Written: February 14, 2023
Abstract
This study examines the connection between conspicuous consumption and income inequality in the United States, using econometric analysis of Google searches for luxury and comfort goods. The results show that there is a strong correlation between the pursuit of luxury items and higher levels of income inequality in different states of the US. It suggests that people living in states where inequality is higher tend to demand more luxury goods as status symbols. However, this trend can have negative consequences, including hindering wealth redistribution policies, affecting savings rates, and increasing criminal activities related to luxury items. The paper analyzes the dynamics of consumer behavior and socioeconomic disparities and highlights the harmful effects of the relationship between conspicuous consumption and inequality for society as a whole, despite being profitable for luxury brands.
Keywords: Conspicuous Consumption, Inequality, Google Trends, Status Goods
JEL Classification: D60, O40, O50
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