Definition and Examples
Conspicuous consumption refers to the purchase of goods that reflect economic status. Conspicuous consumption signifies the acquisition of goods that symbolize wealth. It aims to enhance the consumer’s social standing and reputation. For example, a person may buy an expensive luxury car or a large amount of entertainment equipment to provoke envy and admiration from peers.
According to Veblen’s theory, an item is considered luxurious if it is costly, of high quality, and exceeds practical use. There is an element of extravagance in Veblen’s theory of conspicuous consumption. Necessities are not related to conspicuous consumption; the item classified as such must be in excess of a person’s basic needs.
Another example of conspicuous consumption in popular culture is Martin Scorsese’s 2013 biopic “The Wolf of Wall Street.” The film is a dramatic portrayal of excess, with scenes ranging from lavish house parties to drug use on yachts.
Veblen goods, which are goods for which demand increases as price rises, are associated with conspicuous consumption. High prices generate demand for these types of goods among the wealthiest consumers. Acquiring these kinds of goods at elevated prices aims to impress others.
How Conspicuous Consumption Works
Veblen’s “Theory of the Leisure Class” assumes that the leisure class, or upper and middle classes, is rooted in capitalism. Veblen posited that economic hierarchies are formed in advanced societies where labor is delegated to lower classes and leisure is held in high regard. Conspicuous consumption becomes a lifestyle for those belonging to the middle and upper classes.
Veblen argues that the importance of wealth is to impress others with it. According to the theory, people are motivated to purchase luxury goods for more than their intrinsic value. The main point is to make others aware that they have the privilege of owning these goods.
Veblen notes that financial mimicry, or the desire to outdo or surpass someone else’s financial status, drives conspicuous consumption.
Although people buy luxury goods for enjoyment, the overarching motive for conspicuous spending is to impress others.
Conspicuous consumption is often associated with wealthy individuals, but it also includes the middle and working classes. Between the global market for counterfeit goods and the many individuals who incur debt to purchase luxury items, conspicuous consumption is prevalent in our society.
Critique of Conspicuous Consumption
Veblen’s book is seen as a classic critique of conspicuous consumption, but despite that, some economists have criticized the theory. Critics have stated that since the theory applies only to luxury good buyers, it cannot be applied to all types of consumption as Veblen intended.
Furthermore, the idea is based on the notion that the upper class primarily determines spending, excluding the impact of consumers at the lower end of the economic spectrum. Other arguments state that the way status is conveyed has changed over time, and it is now largely considered that not displaying wealth conspicuously is the most distinctive, or that lifestyle rather than social factors determines spending, which differs from what Veblen assumed.
Main Conclusions
Conspicuous consumption refers to spending on goods or services that are deemed exclusive and valuable. Conspicuous consumption applies to items such as luxury cars, clothing, and also to other visible displays like extravagant parties and drug use. Although the traditional conspicuous consumer is wealthy, individuals from all economic classes can participate in conspicuous consumption.
Source:
https://www.thebalancemoney.com/what-is-conspicuous-consumption-5200252
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