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Conspicuous Consumption

Travel Budgets are detroyed by splurge spending and conspicuous consumption, either you are on a budget or not, there is not middle option.

Tue, 6 Apr 2010 05:00:04

Conspicuous consumption is a term used to describe the lavish spending on goods and services acquired mainly for the purpose of displaying income or wealth. In the mind of a conspicuous consumer, such display serves as a means of attaining or maintaining social status. A very similar but more colloquial term is "keeping up with the Joneses".

Invidious consumption, a more specialized term, refers to consumption deliberately intended to cause envy.

History and evolution of the term
Thorstein Veblen was a Norwegian-American sociologist and economist, and a co-founder of the institutional economics movement.The term conspicuous consumption was introduced by economist and sociologist Thorstein Veblen in his 1899 book The Theory of the Leisure Class.[1] Veblen used the term to depict the behavioral characteristic of the nouveau riche, a class emerging in the 19th century as a result of the accumulation of wealth during the Second Industrial Revolution. In this context, the application of the term should be narrowed to the elements of the upper class who use their enormous wealth to manifest social power, whether real or perceived. An instance of conspicuous consumption in that era is women's dress fashions, which included skirts using expensive cloth. Not only was the cloth conspicuously of an expensive type, but the way it was arranged was such that many meters of cloth would be used and displayed, making a style clearly out of the financial reach of less well off people.

With significant improvement of living standards and the emergence of the middle class in the 20th century, the term conspicuous consumption is now broadly applied to individuals and households with expendable incomes whose consumption patterns are prompted by the utility of goods to show their status rather than any intrinsic utility of such goods. In the 1920s, economists such as Paul Nystrom theorized that lifestyle changes brought on by the industrial age were inducing a "philosophy of futility" in the masses, which would increase fashionable consumption. Thus, the concept of conspicuous consumption has been discussed in the context of addictive or narcissistic behaviors induced by consumerism, the desire for immediate gratification, and hedonic expectations.

Whereas previously, conspicuous consumption was thought to be something engaged in primarily by the rich, recent research by economists Kerwin Kofi Charles, Erik Hurst, and professor of finance Nikolai Roussanov points to a different understanding, that conspicuous consumption is more common among poorer groups of people and emerging economies. Displays of wealth in these groups serve to combat the impression that a person is poor, often because they are a member of a group perceived by society as poor.[2] The 1996 book The Millionaire Next Door also challenges the traditional views on conspicuous consumption by looking at the wealthiest Americans, finding that most millionaires are quite frugal and lead modest lifestyles.[3]

Examples of conspicuous consumption
In the U.S., a trend in 1950s towards large houses began, with the average size of a home about doubling over a period of 50 years. This trend has been compared to the rise of the SUV, also often a manifestation of conspicuous consumption. People have purchased huge houses even at the expense of the size of their yard, the inability to save funds for retirement, or a greatly increased commute time, up to a couple of hours. Such large homes can also facilitate other forms of consumption, in providing extra storage space for vehicles, clothes, and other objects.[4]

In the 2000s, the term conspicuous compassion was used to refer to charitable giving performed in a similar way and for similar reasons as conspicuous consumption.[5]