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

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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)

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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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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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.
Higgins, Richard S & Rubin, Paul H, 1986. "Counterfeit Goods," Journal of Law & Economics, University of Chicago Press, vol. 29(2), pages 211-30, October.
Gene M. Grossman & Carl Shapiro, 1988. "Foreign Counterfeiting of Status Goods," NBER Working Papers 1915, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Grossman, Gene M & Shapiro, Carl, 1988. "Foreign Counterfeiting of Status Goods," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 79-100, February. [Downloadable!] (restricted)
Cooper, Ben & Garcia-Penalosa, Cecilia & Funk, Peter, 2001. "Status Effects and Negative Utility Growth," Economic Journal, Royal Economic Society, vol. 111(473), pages 642-65, July. [Downloadable!] (restricted)
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- Cooper, B. & Garcia-Penalosa, C., 1998. "Status Effects and Neganive Utility Growth," Economics Papers 150, Economics Group, Nuffield College, University of Oxford.
Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132. [Downloadable!] (restricted)
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. [Downloadable!] (restricted)

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Ed Hopkins & Tatiana Kornienko, 2004. "Running to Keep in the Same Place: Consumer Choice as a Game of Status," ESE Discussion Papers 92, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
Other versions:
- Ed Hopkins & Tatiana Kornienko, 2004. "Running to Keep in the Same Place: Consumer Choice as a Game of Status," American Economic Review, American Economic Association, vol. 94(4), pages 1085-1107, September. [Downloadable!]
Ed Hopkins & Tatiana Kornienko, 2004. "Status, Inequality and Growth," ESE Discussion Papers 123, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
Ed Hopkins & Tatiana Kornienko, 2005. "Inequality and Growth in the Presence of Competition for Status," Levine's Bibliography 122247000000000554, UCLA Department of Economics. [Downloadable!]
Other versions:
- 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. [Downloadable!] (restricted)

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