2012-02: Conspicuous consumption and the distribution of income within social groups (Working paper)

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Author(s)
Chai, Andreas
Kaus, Wolfhard
Griffith University Author(s)
Year published
2012
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This paper explores the relationship between the dispersion of group income and conspicuous consumption levels of individuals in multi-group settings. Consistent with existing finding we find a negative relationship between income dispersion and conspicuous consumption. Further, using South African data, we find evidence that increasing the income distribution has precisely the reverse of the hypothesized effect: as the dispersion of income within a group increases, rich households in the group tend to reduce spending on visible goods, while the poor tend to increase spending on visible goods.This paper explores the relationship between the dispersion of group income and conspicuous consumption levels of individuals in multi-group settings. Consistent with existing finding we find a negative relationship between income dispersion and conspicuous consumption. Further, using South African data, we find evidence that increasing the income distribution has precisely the reverse of the hypothesized effect: as the dispersion of income within a group increases, rich households in the group tend to reduce spending on visible goods, while the poor tend to increase spending on visible goods.
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Copyright © 2010 by author(s). No part of this paper may be reproduced in any form, or stored in a retrieval system, without prior permission of the author(s).
Note
Economics and Business Statistics
Subject
J15 - Economics of Minorities, Races, and Immigrants; Non-labor Discrimination
D83 - Search; Learning; Information and Knowledge; Communication; Belief
D12 - Consumer Economics: Empirical Analysis
O12 - Microeconomic Analyses of Economic Development
Conspicuous consumption
income distribution
signaling
status
South Africa