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Consumption and social identity: Evidence from India

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  • Khamis, Melanie
  • Prakash, Nishith
  • Siddique, Zahra

Abstract

We examine spending on consumption items which have signaling value in social interactions across groups with distinctive social identities in India, where social identities are defined by caste and religious affiliations. Using nationally representative micro data on household consumption expenditures, we find that disadvantaged caste groups such as Other Backward Castes spend 8 percent more on visible consumption than Brahmin and High Caste groups while social groups such as Muslims spend 14 percent less, after controlling for differences in permanent income, household assets and household demographic composition. The differences across social groups are significant and robust and these differences persist within different sub populations. We find that the higher spending of OBC households on visible consumption is diverted from education spending, while Muslim households divert spending from visible consumption and education towards greater food spending. Additionally, we find that these consumption patterns can be partly explained as a result of the status signaling nature of the consumption items. We also discuss alternative sources of differences in consumption patterns across groups which stem from religious observance.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 83 (2012)
Issue (Month): 3 ()
Pages: 353-371

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Handle: RePEc:eee:jeborg:v:83:y:2012:i:3:p:353-371

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Keywords: Households; Consumption; India;

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  1. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
  2. Banerjee, Abhijit & Duflo, Esther, 2006. "The Economic Lives of the Poor," CEPR Discussion Papers 5968, C.E.P.R. Discussion Papers.
  3. Siddique, Zahra, 2011. "Evidence on Caste Based Discrimination," Labour Economics, Elsevier, vol. 18(S1), pages S146-S159.
  4. Kerwin Kofi Charles & Erik Hurst & Nikolai Roussanov, 2007. "Conspicuous Consumption and Race," NBER Working Papers 13392, National Bureau of Economic Research, Inc.
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  9. Bloch, Francis & Rao, Vijayendra & Desai, Sonalde, 1999. "Wedding Celebrations as Conspicuous Consumption : Signaling Social Status in Rural India," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  10. Ori Heffetz, 2011. "A Test of Conspicuous Consumption: Visibility and Income Elasticities," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1101-1117, November.
  11. Veblen, Thorstein, 1899. "The Theory of the Leisure Class," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1899.
  12. Ireland, Norman J., 1994. "On limiting the market for status signals," Journal of Public Economics, Elsevier, vol. 53(1), pages 91-110, January.
  13. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
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Cited by:
  1. Xavier Fontaine & Katsunori Yamada, 2013. "Caste Comparisons: Evidence from India," ISER Discussion Paper 0867, Institute of Social and Economic Research, Osaka University.

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