Conspicuous consumption

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 necessary corollary, is the term applied to consumption of goods and services for the deliberate purpose of inspiring envy in others.

These terms are not used descriptively for behavioral disorders such as binge eating and compulsive spending.

History and evolution of the term

The term conspicuous consumption was introduced by Norwegian American economist and sociologist Thorstein Veblen in his 1899 book The Theory of the Leisure Class. 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.

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.

In recent years, conspicuous consumption is viewed as a contributing factor to behavioral disorders such as compulsive spending and is a major contributor to personal bankruptcies resulting from abuse and mismanagement of credit.

Social and economic effects

Since socio-economic status (the socially-created effects of wealth or income) is a positional good which is in fixed supply, any conspicuous consumption generates negative externalities. In fact, conspicuous consumption may be seen as the in-kind scarcity rent of socio-economic status. Minimizing economic inefficiency by capturing this rent and curbing wasteful consumption is an important argument for luxury taxes and other corrective policies. As John Stuart Mill argued:

See also


  • Veblen, Thorstein. (1899) Theory of the Leisure Class: An Economic Study in the Evolution of Institutions. New York: Macmillan. 400 pp.

* 1994 Dover paperback edition, ISBN 0-486-28062-4
* 1994 Penguin Classics edition, ISBN 0-14-018795-2

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