Status and the Demand for Visible Goods: Experimental Evidence on Conspicuous Consumption
54 Pages Posted: 6 Dec 2015
Date Written: December 4, 2015
Some economists argue that consumption of publicly visible goods is driven by social status. Making a causal inference about this claim is difficult with observational data. We conduct an experiment in which we vary both whether a purchase of a physical product is publicly visible or kept private and whether the income used for purchase is linked to social status or randomly assigned. Making consumption choices visible leads to a large increase in demand when income is linked to status, but not otherwise. We investigate the characteristics that mediate this effect and estimate its impact on welfare.
Keywords: status, conspicuous consumption, experiment
JEL Classification: C91, D03
Suggested Citation: Suggested Citation