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Fooling the eye of the beholder: deceptive status signalling among the poor in developing countries

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  • Luuk Van Kempen

    (CentER and Department of Economics, Tilburg University, The Netherlands)

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    Abstract

    Poor consumers in the developing world use a variety of status signalling devices that rely on deception of the observer. A frequently used deceptive strategy is the consumption of counterfeit instead of original status-intensive goods, mainly cheap copies of expensive brand-name goods from developed countries. The choice for such deceptive modes of conspicuous consumption is analysed within a product characteristics approach as developed by Lancaster and compared with non-deceptive alternatives. Under the controversial assumption that the poor care about status, it is shown that counterfeit goods embody a more 'appropriate' combination of status and functionality than original goods. It appears that the consumption of counterfeits potentially enhances the welfare of low-income consumers, depending on the extent to which the eye of the relevant beholder is effectively deceived. Copyright © 2003 John Wiley & Sons, Ltd.

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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

    Volume (Year): 15 (2003)
    Issue (Month): 2 ()
    Pages: 157-177

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    Handle: RePEc:wly:jintdv:v:15:y:2003:i:2:p:157-177

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    Web page: http://www3.interscience.wiley.com/journal/5102/home

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    1. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
    2. Wells, John, 1977. "The Diffusion of Durables in Brazil and Its Implications for Recent Controversies Concerning Brazilian Development," Cambridge Journal of Economics, Oxford University Press, vol. 1(3), pages 259-79, September.
    3. James, M.J., 1987. "Positional goods, conspicuous consumption and the international demonstration effect reconsidered," Open Access publications from Tilburg University urn:nbn:nl:ui:12-176680, Tilburg University.
    4. James, M.J., 2000. "Do consumers in developing countries gain or lose from globalization?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-84477, Tilburg University.
    5. Gene M. Grossman & Carl Shapiro, 1986. "Foreign Counterfeiting of Status Goods," NBER Working Papers 1915, National Bureau of Economic Research, Inc.
    6. Higgins, Richard S & Rubin, Paul H, 1986. "Counterfeit Goods," Journal of Law and Economics, University of Chicago Press, vol. 29(2), pages 211-30, October.
    7. Cooper, B. & Garcia-Penalosa, C., 1998. "Status Effects and Neganive Utility Growth," Economics Papers 150, Economics Group, Nuffield College, University of Oxford.
    8. 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.
    9. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November.
    10. Congleton, Roger D., 1989. "Efficient status seeking: Externalities, and the evolution of status games," Journal of Economic Behavior & Organization, Elsevier, vol. 11(2), pages 175-190, March.
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    Cited by:
    1. Celse, Jérémy, 2012. "Is the positional bias an artefact? Distinguishing positional concerns from egalitarian concerns," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(3), pages 277-283.
    2. Hopkins, Ed & Kornienko, Tatiana, 2006. "Inequality and growth in the presence of competition for status," Economics Letters, Elsevier, vol. 93(2), pages 291-296, November.
    3. Saad, Gad & Vongas, John G., 2009. "The effect of conspicuous consumption on men's testosterone levels," Organizational Behavior and Human Decision Processes, Elsevier, vol. 110(2), pages 80-92, November.
    4. Yoo, Boonghee & Lee, Seung-Hee, 2012. "Asymmetrical effects of past experiences with genuine fashion luxury brands and their counterfeits on purchase intention of each," Journal of Business Research, Elsevier, vol. 65(10), pages 1507-1515.
    5. Rik Linssen & Luuk Kempen & Gerbert Kraaykamp, 2011. "Subjective Well-being in Rural India: The Curse of Conspicuous Consumption," Social Indicators Research, Springer, vol. 101(1), pages 57-72, March.

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