Conspicuous/Positional Consumption

Definition

The term conspicuous consumption (CC) is used to describe extravagant spending on luxuries or leisure activities that display one’s wealth to enhance prestige, economic power, and indicate membership of a superior class, rather than to meet basic needs. The term originated in Veblen’s (1899) The Theory of the Leisure Class, in which he argued that “the conspicuous consumption of valuable goods is a means of securing the respectability of the gentleman of leisure” and included, for example, tapestries, high-quality clothing (such as high heels), expensive entertainment, feasts, jewelry, and other non-functional items that were used to signal status. Many of these items also characterize contemporary consumption.

The term is close to positional consumption (PC) which involves the acquisition of goods and services that confer social status and distinguish the owner from others. These goods are valued not only for their intrinsic qualities but also for their ability to signify social status.

Conspicuous consumption is becoming a widely addressed issue given the increasingly pressing climate crisis, resource degradation, and overconsumption. This concern extends beyond the wealthy, who represent a small percentage of the population with a high carbon footprint. However, through social emulation, where individuals imitate the (extravagant and wasteful) consumption patterns of higher social classes to enhance their own status, CC has a negative environmental impact that affects everyone (see Carbon Inequality, Household Income Versus Carbon Footprint). This process is accelerated by growing income and wealth inequality, which leads to a growing demand for positional goods as individuals seek to signal their relative social position through their consumption choices, also known as the “keeping-up-with-the-Joneses” mentality.

Both conspicuous consumption and positional consumption contribute to unsustainable consumption patterns, not only among the wealthy but also among other “emulating” strata of society. Over time, different aspects of this problem have evolved, broadening its meaning to treat these goods more as symbolic goods, which are not necessarily costly from a production perspective, but become costly because they are purchased to differentiate (social distinction) certain groups or individuals. For example, luxury brands respond to conspicuous consumption by continuously releasing limited-edition collections or exclusive collaborations. These goods are not inherently expensive due to production costs but gain value because they signal status and exclusivity.

History

The meaning of conspicuous consumption has shifted and expanded over time, influenced by different perspectives across disciplines. While the sociological perspective was primary (Veblen was considered not only an economist but also a sociologist), with the birth of psychology in the late 19th century, this discipline also became interested in providing a different individual-focused explanation (e.g., survival, personal traits). The inclusion of ethical thinking in some schools of economics after the 1980s has influenced the moral-indifferent economic attitude, explored in the next section.

Among sociologists, Pierre Bourdieu, in his classic work Distinction: A Social Critique of the Judgment of Taste, emphasized that we consume to differentiate ourselves from others. Our consumption patterns reflect our place in the social field, known as habitus (dispositions that guide consumption within a social field), by seeking to consume in accordance with one’s social class. He extended Veblen’s ideas, which focused on income and class position, by introducing the concept of status competition through symbolic capital. This includes different types of resources: financial (economic capital), social networks and relationships (social capital), and distinctive “tastes”, skills, knowledge, and practices accumulated through upbringing and education (cultural capital). The latter is shaped by private and elite schools, where individuals learn what are considered appropriate or desirable forms of consumption (“tastes”) to differentiate themselves from others through specific consumption patterns. This cultural capital also has a significant impact on consumer choice.

Psychology has viewed CC/PC behavior as an expression of motivational structures and survival mechanisms, linking it to basic needs such as survival and sexual selection, where displaying wealth attracts mates (De Fraja, 2009). Some personal traits, such as narcissism, may reinforce this mechanism.

Ethical studies have identified the “wasteful” and “immoral” nature of CC, particularly in the context of individuals unable to satisfy their basic needs. This common intuition regards excessive luxury spending amid suffering as unethical. In times of crisis or war, regulations have often restricted luxury products that are considered wasteful (e.g., clothing regulations during World War II in the United States).

Economics has played a crucial role in shaping policy. By analyzing the impact of conspicuous consumption on resource use and sustainability, economists have influenced policies aimed at promoting sustainable consumption patterns. As we will see in the next section, however, there is no single view among economists.

Different Perspectives

Policy decisions, especially those affecting sustainability goals, are often influenced by economic theories. Some of the policies based on mainstream theories stimulated CC/PC instead of reducing it.

Neoclassical economics, which views choices as derivatives of preferences and budget constraints, initially showed little interest in conspicuous consumption. However, Keynesian economics, which focuses on the demand side of the economy, recognized its importance. Keynesian theory, inspired by thinkers such as Mandeville who suggested that “private vices” create “public benefits”, saw such spending as beneficial during economic downturns (see Consumerism). Keynes believed that increased spending could boost aggregate demand, support employment, and stimulate economic growth.

This concept was further discussed in conjunction with the “trickle-down effect”, which is a rationale employed to justify neoliberal policies, by suggesting that benefits given to the wealthy or corporations, such as tax cuts or subsidies, would eventually trickle down to society at large through increased investment and spending. Creating greater wealth at the top of the economic pyramid was justified as stimulating economic growth and job creation, thereby indirectly benefiting all segments of society. Unfortunately, exactly the opposite effect has occurred – increasing inequalities and CC contribute to unnecessary consumption levels, exceeding consumption corridors and basic needs-based consumption levels (see Fair Consumption Space).

Institutional economists such as Wisman (2014) emphasize that CC, especially when combined with inequality, can push individuals into debt as they strive to meet societal standards, creating a vicious cycle of consumption and debt (see Money). This exacerbates economic inequalities and puts additional pressure on resources. CC also has an impact on the erosion of public goods and services, as individuals demonstrate their status through private consumption, leading to reduced support for common resources (self-exclusion from public goods).

Ethically driven economic literature (e.g., humanistic economics such as Schumacher’s Small is Beautiful) and ecological economics (to be distinguished from environmental economics) send strong signals of the necessity of absolute reduction of resource use and social equality (see Steady-State Economics). As high levels of CC/PC can have severe environmental impacts if emulated globally, wealthier classes and countries need to reduce CC. Knowing that even the lowest standard of basic income exceeds our environmental limits, the policies of wealthier countries must focus on reducing consumption in general and among the wealthier classes in particular to mitigate environmental damage (see Carbon Inequality, Climate Justice).

Application

Research on Conspicuous Consumption (CC) and Positional Consumption (PC) has led to several politically interesting and applicable ideas dedicated to remedying this phenomenon (see also Behavior Change, Attitude-Behavior Gap), with the scope to minimize CC:

1. Fiscal policy:
   • Implement redistributive mechanisms that improve access to public goods and services and reduce debt incurred to maintain social status (see Foundational Economy, Universal Basic Services).
   • Introduce taxes on luxury goods, especially those that are harmful to the environment, to discourage unnecessary consumption (see also Personal Carbon Allowance).
   • Ensure the affordability of sustainable goods to encourage wider uptake.
2. Education and media policies:
   • Address the role of private schools in inculcating “tastes” (as discussed by Bourdieu) that lead to CC/PC by expanding quality public education (Education for Sustainable Consumption).
   • Design policies that avoid creating divisions in society that can exacerbate CC/PC patterns (e.g., housing policies).
   • Implement social media literacy programs to highlight the dangers of CC/PC.
   • Promoting anti-consumerist messages through social media.
   • Promote mindfulness and the pursuit of inner values.
3. Motivational interventions and other regulations:
   • Encourage prosumption, self-consumption, and shared consumption to reduce dependence on traditional consumption models (see Prosumerism, Sharing Economy, Circular Economy and Society, Product-Service Systems).
   • Overcome the impact of social media on extensive consumption styles through education and regulations (e.g., regulating the usage of social media, their content, and access) (see Advertising).
   • Adapt government regulations that impose limits on consumption levels as suggested in the concept of consumption corridors.

Further Reading

De Fraja, Gianni. (2009). The origin of utility: Sexual selection and conspicuous consumption. Journal of Economic Behavior & Organization, 72(1), 51–69. https://doi.org/10.1016/j.jebo.2009.05.019.

Trigg, Andrew B. (2001). Veblen, Bourdieu, and conspicuous consumption. Journal of Economic Issues, 35(1), 99–115. https://doi.org/10.1080/00213624.2001.11506342.

Veblen, Thorstein. (1899). The theory of the leisure class. New York, NY: Macmillan.

Watkins, John P. (2019). Veblen’s system of conspicuous waste. Journal of Economic Issues, 53(4), 914–927. https://doi.org/10.1080/00213624.2019.1657745.

Wisman, Jon D. (2014). Inequality, social respectability, political power, and environmental devastation. Journal of Economic Issues, 45(4), 877–900. https://doi.org/10.2753/JEI0021-3624450407.