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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.

Suggested Citation

  • Luuk Van Kempen, 2003. "Fooling the eye of the beholder: deceptive status signalling among the poor in developing countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(2), pages 157-177.
  • Handle: RePEc:wly:jintdv:v:15:y:2003:i:2:p:157-177
    DOI: 10.1002/jid.973
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    References listed on IDEAS

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    1. Cooper, Ben & Garcia-Penalosa, Cecilia & Funk, Peter, 2001. "Status Effects and Negative Utility Growth," Economic Journal, Royal Economic Society, vol. 111(473), pages 642-665, July.
    2. James, Jeffrey, 1987. "Positional goods, conspicuous consumption and the international demonstration effect reconsidered," World Development, Elsevier, vol. 15(4), pages 449-462, April.
    3. Gene M. Grossman & Carl Shapiro, 1986. "Foreign Counterfeiting of Status Goods," NBER Working Papers 1915, National Bureau of Economic Research, Inc.
    4. Gene M. Grossman & Carl Shapiro, 1988. "Foreign Counterfeiting of Status Goods," The Quarterly Journal of Economics, Oxford University Press, vol. 103(1), pages 79-100.
    5. Higgins, Richard S & Rubin, Paul H, 1986. "Counterfeit Goods," Journal of Law and Economics, University of Chicago Press, vol. 29(2), pages 211-230, October.
    6. 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.
    7. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    8. 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 259-279, September.
    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. 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 349-373, June.
    11. James, M.J., 2000. "Do consumers in developing countries gain or lose from globalization?," Other publications TiSEM e7f8ff07-cc97-4431-a52c-e, Tilburg University, School of Economics and Management.
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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. 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.
    3. El Harbi, Sana & Bekir, Insaf & Grolleau, Gilles & Sutan, Angela, 2015. "Efficiency, equality, positionality: What do people maximize? Experimental vs. hypothetical evidence from Tunisia," Journal of Economic Psychology, Elsevier, vol. 47(C), pages 77-84.
    4. 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.
    5. Rik Linssen & Luuk Kempen & Gerbert Kraaykamp, 2011. "Subjective Well-being in Rural India: The Curse of Conspicuous Consumption," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 101(1), pages 57-72, March.
    6. 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.

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