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Conspicuous consumption and “race”: Evidence from South Africa

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  • Kaus, Wolfhard

Abstract

A century ago, Thorstein Veblen introduced socially contingent consumption into the economic literature. This paper complements the scarce empirical literature by testing his conjecture on South African household data and finds that Black and Coloured households spend relatively more on visible consumption than comparable White households. Following the approach of Charles et al. (2009), this paper explores whether the differences in visible expenditures can be explained with a signaling model of status seeking. Moreover, it is assessed to which extent positional concerns motivate conspicuous consumption. Although the socially contingent share in visible consumption increases with income, different incentives to consume conspicuously seem to explain that, at every level of income, Black households spend relatively more on visible consumption than comparable White households. In contrast to the findings of Charles et al. (2009) where differential spending on conspicuous consumption can be found also within each group separately, the model's core hypothesis fails to hold within the group of White South Africans.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 100 (2013)
Issue (Month): 1 ()
Pages: 63-73

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Handle: RePEc:eee:deveco:v:100:y:2013:i:1:p:63-73

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Conspicuous consumption; Signaling; Status; South Africa;

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References

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Cited by:
  1. Alexander M. Danzer & Barbara Dietz & Kseniia Gatskova & Achim Schmillen, 2013. "Showing off to the new neighbors? Income, socioeconomic status and consumption patterns of internal migrants," Working Papers 330, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  2. Leonhard Lades, 2013. "Explaining shapes of Engel curves: the impact of differential satiation dynamics on consumer behavior," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1023-1045, November.
  3. Tim Friehe & Mario Mechtel, 2012. "Conspicuous Consumption and Communism: Evidence from East and West Germany," IAAEU Discussion Papers 201203, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  4. Leonhard K. Lades, 2012. "The impact of differential satiation dynamics on changing consumer behavior, wellbeing, and innovative activity," Papers on Economics and Evolution 2012-16, Max Planck Institute of Economics, Evolutionary Economics Group.
  5. Andreas Chai & Wolfhard Kaus, 2013. "Signalling to whom? Conspicuous spending and the local density of the social group income distribution," Papers on Economics and Evolution 2012-18, Max Planck Institute of Economics, Evolutionary Economics Group.

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