Everything about Conspicuous Consumption totally explained
Conspicuous consumption is a term used to describe the lavish spending on goods and services acquired mainly for the purpose of displaying
income or
wealth. In the mind of a conspicuous consumer, such display serves as a means of attaining or maintaining
social status. A very similar but more colloquial term is "
keeping up with the Joneses".
Invidious consumption, a necessary
corollary, is the term applied to consumption of goods and services for the deliberate purpose of inspiring
envy in others.
These terms are not used descriptively for behavioral disorders such as
binge eating and
compulsive spending.
History and evolution of the term
The term
conspicuous consumption was introduced by
Norwegian American economist and sociologist
Thorstein Veblen in his 1899 book
The Theory of the Leisure Class. Veblen used the term to depict the behavioral characteristic of the
nouveau riche, a class emerging in the 19th century as a result of the
accumulation of wealth during the
Second Industrial Revolution. In this context, the application of the term should be narrowed to the elements of the
upper class who use their enormous wealth to manifest social power, whether real or perceived.
With significant improvement of living standards and the emergence of the
middle class in the 20th century, the term
conspicuous consumption is now broadly applied to individuals and households with expendable incomes whose consumption patterns are prompted by the utility of goods to show their
status rather than any intrinsic utility of such goods. In the 1920s, economists such as
Paul Nystrom theorized that lifestyle changes brought on by the industrial age were inducing a "
philosophy of futility" in the masses, which would increase fashionable consumption. Thus, the concept of conspicuous consumption has been discussed in the context of
addictive or
narcissistic behaviors induced by
consumerism, the desire for immediate gratification, and
hedonic expectations.
In recent years, conspicuous consumption is viewed as a contributing factor to behavioral disorders such as
compulsive spending and is a major contributor to personal
bankruptcies resulting from abuse and mismanagement of
credit.
Social and economic effects
Since
socio-economic status (the socially-created effects of wealth or income) is a
positional good which is in fixed supply, any conspicuous consumption generates
negative externalities. In fact, conspicuous consumption may be seen as the in-kind
scarcity rent of socio-economic status. Minimizing economic inefficiency by capturing this rent and curbing wasteful consumption is an important argument for
luxury taxes and other corrective policies. As
John Stuart Mill argued:
Further Information
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