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

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Chai, Andreas
Kaus, Wolfhard
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Nguyen, Tom

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2012
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11 pages

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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.

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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).

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Economics and Business Statistics

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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

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South Africa

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