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Conspicuous consumption and income inequality in an emerging economy: evidence from India

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  • Saravana Jaikumar

    ()

  • Ankur Sarin

    ()

Abstract

The impact of income inequality on conspicuous consumption has been a topic of much discussion, but little empirical examination in the emerging market context. In this paper, using data from the India Human Development Survey (2004–2005) and employing simple regression framework, we examine the effect of income inequality on conspicuous consumption in Indian households. We also empirically examine whether the relationship between inequality and conspicuous consumption changes with a household’s relative wealth status. Drawing on existing literature, we hypothesize that low-income and rural groups are likely to engage in higher conspicuous consumption due to the reduced attractiveness of alternate mechanisms to signal status (like professional titles and educational qualifications) as well as the absence of well-functioning financial institutions that might inhibit “status seeking” savings. Consistent with this hypothesis, our results suggest that increased income inequality is associated with an increased spending on conspicuous consumption as a share of total spending, with the associated response being higher for relatively low-income households and those living in rural settings. Our findings have significant policy and marketing implications in emerging markets like India. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Saravana Jaikumar & Ankur Sarin, 2015. "Conspicuous consumption and income inequality in an emerging economy: evidence from India," Marketing Letters, Springer, vol. 26(3), pages 279-292, September.
  • Handle: RePEc:kap:mktlet:v:26:y:2015:i:3:p:279-292
    DOI: 10.1007/s11002-015-9350-5
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    References listed on IDEAS

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    Cited by:

    1. Andrew Bryant & Ronald Paul Hill, 2019. "Poverty, consumption, and counterintuitive behavior," Marketing Letters, Springer, vol. 30(3), pages 233-243, December.
    2. Srivastava, Abhinav & Mukherjee, Srabanti & Jebarajakirthy, Charles, 2020. "Aspirational consumption at the bottom of pyramid: A review of literature and future research directions," Journal of Business Research, Elsevier, vol. 110(C), pages 246-259.
    3. Sung-Ha HwangBy & Jungmin Lee, 2017. "Conspicuous consumption and income inequality," Oxford Economic Papers, Oxford University Press, vol. 69(4), pages 870-896.
    4. Nyadzayo, Munyaradzi W. & Matanda, Margaret J. & Rajaguru, Rajesh, 2018. "The determinants of franchise brand loyalty in B2B markets: An emerging market perspective," Journal of Business Research, Elsevier, vol. 86(C), pages 435-445.
    5. Gurzki, Hannes & Woisetschläger, David M., 2017. "Mapping the luxury research landscape: A bibliometric citation analysis," Journal of Business Research, Elsevier, vol. 77(C), pages 147-166.
    6. Jaikumar, Saravana & Singh, Ramendra & Sarin, Ankur, 2018. "‘I show off, so I am well off’: Subjective economic well-being and conspicuous consumption in an emerging economy," Journal of Business Research, Elsevier, vol. 86(C), pages 386-393.

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