The Atlantic magazine has an interesting article on how conspicuous consumption – the practice of showing off luxury goods – differs across social groups and seems to be more common when your peers are low earners.
The piece discusses work led by economist Kerwin Charles who was interested in why, despite being less well off on average, black and latino Americans spent a larger proportion of their income on visible goods.
Their research found that race, in itself, wasn’t important, as conspicuous consumption was explained in all racial groups as being almost entirely due to the wealth of the community in which the person lives.
It turns out that the poorer the community, the larger the level of conspicuous consumption. In other words, people from less well off communities have a greater need to advertise their wealth through the visible goods they buy.
The full paper is available online as a pdf if you want the full details, but the Atlantic article goes on to observe that in higher-income communities people tend to spend their money on luxury goods others can’t see, but which provide experiences.
Russ Alan Prince and Lewis Schiff describe a similar pattern in their book, The Middle-Class Millionaire, which analyzes the spending habits of the 8.4million American households whose wealth is self-made and whose net worth, including their home equity, is between $1 million and $10 million. Aside from a penchant for fancy cars, these millionaires devote their luxury dollars mostly to goods and services outsiders can’t see: concierge health care, home renovations, all sorts of personal coaches, and expensive family vacations. They focus less on impressing strangers and more on family- and self-improvement. Even when they invest in traditional luxuries like second homes, jets, or yachts, they prefer fractional ownership. “They’re looking for ownership to be converted into a relationship rather than an asset they have to take care of,” says Schiff. Their primary luxuries are time and attention.
Based on nothing but complete speculation, I wonder whether this simply provides a form of consumption which is conspicuous through other means – conversation or public display of action.
A study published last year (and covered by the Economist) found that priming people with ideas about attracting members of the opposite sex did trigger conspicuous consumption, at least in men, but also resulted in conspicuous altruism.
Perhaps a more subtle form of economic signalling, but with a similar intent – to display our status to others.
Link to Atlantic article ‘Inconspicuous Consumption’.
pdf of full text of study.
Link to Economist article on ‘conspicuous altruism’.
Mind Hacks 
Quote “Their research found that race, in itself, wasn’t important, as conspicuous consumption was explained in all racial groups as being almost entirely due to the wealth of the community in which the person lives.”
quote “Black and Latino Americans spent a larger proportion of their income on visible goods.”
Contradicting themselves. Is it racist to say that races tend to carry there own memes which are more common to there race. I live near a lot of Latinos and Lived Near a lot of Caucasians but i dont hear Caucasians yelling YAI YAI YAI and blasting Latino music out there windows. Common….
Yeah this article is pretty true. My brother was just telling me about a person who earns around minimum wage in California “Korean” haha but bought a 400 dollar jacket recently. Would you really think that however much hours you spent working to earn that 400 dollars is exchangeable for a jacket? I think its a mind game in a way that they want to show there peers that they are superior to them but in reality they are just trying there best to create a illusion to the truth.
Do people really go to school to make such theories? Are they actually paid for it?? And are such shallow speculations actually published???
Everybody knows what human nature is all about, because we are all human. Some people have gone to greater lengths to experience, acknowledge, and assemble their understanding of themselves (by virtue of their wanting to honestly do so), and these people have a greater ability to explain humanity to humanity.
But it’s all fully opaque. Let me break it down:
1) Wikipedia (http://en.wikipedia.org/wiki/Demographics_of_the_United_States) determines these “8.4 million households with equity worth more than $1 million” account for 5% of the total population.
2) But EVERYBODY wants, if not to be stupidly rich, a life of ease over slaving hand-to-mouth.
3) Therefore, if you were rich — ( which is A HUGE MINORITY of the population ) — would you really want to go around parading the fact that you live a life of luxury??????? WHEN everyone else wants it sooooo badly they PRETEND because that’s all they can afford?
DUH. Not unless you want to get lynched, robbed, or killed.
And to even bring race into this discussion is to add insult on top of a long history of oppressive injury.
OOOOHH, and let’s not forget that many of these rich cabrones make their money as a result of a media-rich environment aimed at convincing the middle class that purchasable commodities are the pathes to “experiencing your OWN life of luxury”. How successful would that campaign really be if we all knew we were suckers?
Interesting. I also have a question: why do people outside of economics accept the concept of signalling so uncritically?
This blog deals with a lot of psych and neuro literature. Is there any reason to assume signalling when the signaler is unaware that he/she is signalling? And when the recipient is unaware too? How would one establish scientifically that it is happening?
The problem is that every single behavior can be interpreted as a signal for something (especially by academics!), but that doesn’t mean that it is one.
It almost reminds me of extreme adaptationism in evolutionary biology — the idea that every trait must be adaptive for something. Here it’s that every action is *about* something other than the action itself.