Wealth and Want: Income Inequality and Demand for Luxury Goods in the United States

21 Pages Posted: 16 Feb 2023 Last revised: 28 Apr 2023

See all articles by Mahmut Zeki Akarsu

Mahmut Zeki Akarsu

University of Warsaw

Orkideh Gharehgozli

Montclair State University - Feliciano School of Business

Ram Sewak Dubey

Montclair State University - The Feliciano School of Business, Department of Economics

Date Written: February 14, 2023

Abstract

This study investigates the relationship between conspicuous consumption and inequality in the United States by doing text mining in Google searches for luxury and comfort goods. The findings reveal a strong correlation between the pursuit of luxury items and levels of income inequality in states of the United States (U.S.). An increase in average income leads to a parallel increase in inequality, resulting in a heightened inclination for American citizens to demand luxury goods. However, this trend can have negative consequences, such as hindering wealth redistribution policies, affecting savings rates, and increasing criminal activities related to luxury items. The study highlights the influence of consumer behavior on socioeconomic disparities and the detrimental effects of the correlation 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

Suggested Citation

Akarsu, Mahmut Zeki and Gharehgozli, Orkideh and Dubey, Ram Sewak, Wealth and Want: Income Inequality and Demand for Luxury Goods in the United States (February 14, 2023). Available at SSRN: https://ssrn.com/abstract=4357801 or http://dx.doi.org/10.2139/ssrn.4357801

Mahmut Zeki Akarsu (Contact Author)

University of Warsaw ( email )

Orkideh Gharehgozli

Montclair State University - Feliciano School of Business ( email )

Upper Montclair, NJ 07043
United States

Ram Sewak Dubey

Montclair State University - The Feliciano School of Business, Department of Economics ( email )

538, Feliciano School of Business,
1 Normal Ave
Upper Montclair, NJ 07043
United States
973-655-7778 (Phone)
973-655-7629 (Fax)

HOME PAGE: http://www.montclair.edu/~dubeyr

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