IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Signalling to whom? Conspicuous spending and the local density of the social group income distribution

  • Andreas Chai
  • Wolfhard Kaus

We empirically evaluate two competing explanations about how the dispersion of income within social groups affects household spending on visible goods. Using South African household expenditure data, we find evidence that precisely the reverse of the effect predicted by Charles et al. (2009) takes place in that rich households tend to reduce, rather than increase, spending on visible goods as the dispersion of social group income increases. Our results instead support rank-based models of status competition since the number of within-group peers who possess a similar income level is found to be positively correlated with household spending on visible goods. Moreover, we find that the effect of this 'local' density tends to be stronger in the tail regions of the distribution and performs better than other proxies for the overall income distribution used in recent studies. How the range of visible goods used to signal wealth expands as household income grows is also explored.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Philipps University Marburg, Department of Geography in its series Papers on Economics and Evolution with number 2012-18.

in new window

Length: 28 pages
Date of creation: 29 Jan 2013
Date of revision:
Handle: RePEc:esi:evopap:2012-18
Contact details of provider: Postal:
Deutschhausstrasse 10, 35032 Marburg

Phone: 064212824257
Fax: 064212828950
Web page:

More information through EDIRC

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.:

as in new window
  1. 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.
  2. Kaus, Wolfhard, 2013. "Conspicuous consumption and “race”: Evidence from South Africa," Journal of Development Economics, Elsevier, vol. 100(1), pages 63-73.
  3. Servaas van der Berg & Megan Louw & Derek Yu, 2007. "Post-transition poverty trends based on an alternative data source," Working Papers 08/2007, Stellenbosch University, Department of Economics.
  4. Brown, Philip H. & Bulte, Erwin & Zhang, Xiaobo, 2010. "Positional spending and status seeking in rural China," IFPRI discussion papers 983, International Food Policy Research Institute (IFPRI).
  5. Sara J. Solnick & David Hemenway, 2005. "Are Positional Concerns Stronger in Some Domains than in Others?," American Economic Review, American Economic Association, vol. 95(2), pages 147-151, May.
  6. Chao, Angela & Schor, Juliet B., 1998. "Empirical tests of status consumption: Evidence from women's cosmetics," Journal of Economic Psychology, Elsevier, vol. 19(1), pages 107-131, February.
  7. Omer Moav and & Zvika Neeman, 2012. "Saving Rates and Poverty: The Role of Conspicuous Consumption and Human Capital," Economic Journal, Royal Economic Society, vol. 122(563), pages 933-956, 09.
  8. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
  9. Paul Frijters & Andrew Leigh, 2005. "Materialism on the March: From Conspicuous Leisure to Conspicuous Consumption?," CEPR Discussion Papers 495, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  10. Duangkamon Chotikapanich & William E. Griffiths & D. S. Prasada Rao & Vicar Valencia, 2012. "Global Income Distributions and Inequality, 1993 and 2000: Incorporating Country-Level Inequality Modeled with Beta Distributions," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 52-73, February.
  11. Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, vol. 60(4), pages 837-57, July.
  12. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative income, happiness, and utility: An explanation for the Easterlin paradox and other puzzles," Post-Print halshs-00754299, HAL.
  13. Ulrich Witt, 2001. "special issue: Learning to consume - A theory of wants and the growth of demand," Journal of Evolutionary Economics, Springer, vol. 11(1), pages 23-36.
  14. Hynes, J. Allan, 1998. "The Emergence of the Neoclassical Consumption Function: The Formative Years, 1940–1952," Journal of the History of Economic Thought, Cambridge University Press, vol. 20(01), pages 25-49, March.
  15. Kerwin Kofi Charles & Erik Hurst & Nikolai Roussanov, 2009. "Conspicuous Consumption and Race," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 425-467.
  16. Brown, Alan & Deaton, Angus S, 1972. "Surveys in Applied Economics: Models of Consumer Behaviour," Economic Journal, Royal Economic Society, vol. 82(328), pages 1145-1236, December.
  17. Alessio Moneta & Andreas Chai, 2010. "The evolution of Engel curves and its implications for structural change," Discussion Papers in Economics economics:201009, Griffith University, Department of Accounting, Finance and Economics.
  18. Dorothy S. Brady & Rose D. Friedman, 1947. "Savings and the Income Distribution," NBER Chapters, in: Studies in Income and Wealth, pages 247-265 National Bureau of Economic Research, Inc.
  19. Timothy J. Hatton & Jeffrey G. Williamson, 2008. "Global Migration and the World Economy: Two Centuries of Policy and Performance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582775, December.
  20. A.J. Christopher, 2001. "Urban Segregation in Post-apartheid South Africa," Urban Studies, Urban Studies Journal Limited, vol. 38(3), pages 449-466, March.
  21. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
  22. Derek Yu, 2008. "The comparability of Income and Expenditure Surveys 1995, 2000 and 2005/2006," Working Papers 11/2008, Stellenbosch University, Department of Economics.
  23. Clark, Andrew E. & Oswald, Andrew J., 1998. "Comparison-concave utility and following behaviour in social and economic settings," Journal of Public Economics, Elsevier, vol. 70(1), pages 133-155, October.
  24. Gary S. Becker & Kevin M. Murphy & Ivan Werning, 2005. "The Equilibrium Distribution of Income and the Market for Status," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 282-310, April.
  25. 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.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:esi:evopap:2012-18. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christoph Mengs)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.