Status Goods: Experimental Evidence from Platinum Credit Cards

67 Pages Posted: 18 May 2017 Last revised: 27 Apr 2018

See all articles by Leonardo Bursztyn

Leonardo Bursztyn

University of Chicago - Department of Economics

Bruno Ferman

Sao Paulo School of Economics - FGV

Stefano Fiorin

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area

Martin Kanz

World Bank; World Bank - Development Research Group (DECRG)

Gautam Rao

Harvard University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 16, 2017

Abstract

This paper provides novel evidence on status goods, using a series of field experiments with an Indonesian bank that markets platinum credit cards to high-income customers. In a first experiment, the paper shows that demand for the platinum card greatly exceeds demand for a nondescript control product with identical benefits, suggesting demand for the pure status aspect of the card. Transaction data reveal that platinum cards are more likely to be used in social contexts, implying social image motivations. Combining price variation with information on the use of the card sheds light on the magnitude of the demand for social status. A second experiment provides evidence of positional externalities from the consumption of these status goods. The final experiment shows that increasing self-esteem causally reduces demand for status goods. This suggests that part of the demand for status is psychological in nature, and that social image is a substitute for self-image.

Keywords: Primary Metals, Inequality, Private Sector Economics, Marketing, Private Sector Development Law, Economic Growth, Industrial Economics, Economic Theory & Research

Suggested Citation

Bursztyn, Leonardo and Ferman, Bruno and Fiorin, Stefano and Kanz, Martin and Rao, Gautam, Status Goods: Experimental Evidence from Platinum Credit Cards (May 16, 2017). World Bank Policy Research Working Paper No. 8064. Available at SSRN: https://ssrn.com/abstract=2969645

Leonardo Bursztyn (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

Bruno Ferman

Sao Paulo School of Economics - FGV ( email )

Rua Itapeva n 474
Sao Paulo, DC 01332-000 20052
Brazil

HOME PAGE: http://https://sites.google.com/site/brunoferman/

Stefano Fiorin

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area ( email )

110 Westwood Plaza
Box 951481
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://www.anderson.ucla.edu/degrees/phd/phd-students/gem/fiorin

Martin Kanz

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Gautam Rao

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

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