Consumer Behavior 101: Income and Social Class - Social Class Consumption Conspicuous Consumption Status Symbols Veblen

What It Is

Conspicuous Consumption is a concept that describes the tendency of individuals to purchase and display luxury goods and services to publicly display their wealth and status. This concept is associated with the work of economist Thorstein Veblen (1899) in his book "The Theory of the Leisure Class." Veblen argued that conspicuous consumption is a way for individuals to signal their social status and differentiate themselves from others. For example, the luxury car brand Bentley is often associated with conspicuous consumption, as its high-end vehicles are seen as status symbols and a way for individuals to publicly display their wealth.

Key Terms & Concepts

• Conspicuous Consumption: The tendency of individuals to purchase and display luxury goods and services to publicly display their wealth and status.
• Status Symbols: Objects or behaviors that are used to signal an individual's social status or prestige.
• Veblen Goods: Goods that increase in demand as their price increases, due to their association with status and prestige.
• Thorstein Veblen (1899): Economist who first described the concept of conspicuous consumption in his book "The Theory of the Leisure Class."
• Leisure Class: A social class characterized by a high level of wealth and leisure time, which is often associated with conspicuous consumption.
• Social Stratification: The division of society into different social classes based on factors such as wealth, income, and education.
• Aspirational Consumption: The tendency of individuals to purchase goods and services that they aspire to own, but may not currently be able to afford.
• Brand Identity: The image or personality that a brand projects to consumers, which can be used to signal status and prestige.
• Luxury Brand: A brand that is associated with high-end goods and services, and is often used to signal status and prestige.
• Status Anxiety: The feeling of anxiety or insecurity that individuals experience when they feel that their social status is being threatened.
• Keeping Up with the Joneses: The tendency of individuals to purchase goods and services in order to keep up with their peers or neighbors.
• Social Comparison: The tendency of individuals to compare themselves to others in order to evaluate their own social status.
• Reference Group: A group of people that an individual uses as a reference point for evaluating their own social status.

Common Misunderstandings

• Misunderstanding: Conspicuous consumption is only associated with luxury goods and services.
• Correction: Conspicuous consumption can be associated with any goods or services that are used to signal status and prestige, regardless of their price or quality.
• Misunderstanding: Status symbols are only associated with material possessions.
• Correction: Status symbols can be associated with any object or behavior that is used to signal an individual's social status, including behaviors such as fashion or music preferences.
• Misunderstanding: Conspicuous consumption is only a problem for individuals who are wealthy.
• Correction: Conspicuous consumption can be a problem for individuals of any income level, as it can lead to feelings of anxiety and insecurity.

Quick Application / Identification

Scenario: A young professional purchases a designer handbag in order to impress her colleagues at work. Identify the concept that is being applied in this scenario.

Answer: Conspicuous Consumption. This is an example of conspicuous consumption because the individual is purchasing a luxury good in order to publicly display her wealth and status.

Last?Minute Revision

• Thorstein Veblen (1899): Economist who first described the concept of conspicuous consumption.
• Veblen Goods: Goods that increase in demand as their price increases, due to their association with status and prestige.
• Status Symbols: Objects or behaviors that are used to signal an individual's social status or prestige.
• Conspicuous Consumption: The tendency of individuals to purchase and display luxury goods and services to publicly display their wealth and status.
• Aspirational Consumption: The tendency of individuals to purchase goods and services that they aspire to own, but may not currently be able to afford.
• Brand Identity: The image or personality that a brand projects to consumers, which can be used to signal status and prestige.
• Luxury Brand: A brand that is associated with high-end goods and services, and is often used to signal status and prestige.
• Status Anxiety: The feeling of anxiety or insecurity that individuals experience when they feel that their social status is being threatened.
• Keeping Up with the Joneses: The tendency of individuals to purchase goods and services in order to keep up with their peers or neighbors.
• Social Comparison: The tendency of individuals to compare themselves to others in order to evaluate their own social status.
• Reference Group: A group of people that an individual uses as a reference point for evaluating their own social status.
• Conspicuous Consumption is not the same as Aspirational Consumption.
• Status Symbols can be associated with any object or behavior, not just material possessions.
• Conspicuous Consumption can be a problem for individuals of any income level.