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Keeping Up Appearances: An Experimental Investigation of Socioeconomic Status Signaling to Avoid Discrimination

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  • Dupas, Pascaline
  • Fafchamps, Marcel
  • Hernandez-Nunez, Laura

Abstract

We investigate the welfare cost of relative rank considerations, using a series of vignettes and lab-in-the-field experiments with over 2,000 individuals in Abidjan, C\^ote d'Ivoire. We show that: (1) people perceived to be of very low rank are considered more likely to be sidelined from beneficial opportunities in many aspects of life; and (2) in response, people invest in their appearance and distort consumption choices in order to appear of higher rank. These effects are economically significant. As predicted by a simple signaling model, the distortion concerns people with low (but not too low) socio-economic status and the SES range concerned varies across types of beneficial opportunities.

Suggested Citation

  • Dupas, Pascaline & Fafchamps, Marcel & Hernandez-Nunez, Laura, 2024. "Keeping Up Appearances: An Experimental Investigation of Socioeconomic Status Signaling to Avoid Discrimination," CEPR Discussion Papers 19092, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:19092
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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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