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

Abstract

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.