Conspicuous Consumption
Conspicuous consumption is a term that refers to spending of money on and acquiring luxury services and goods to display economic power publicly. The term was introduced by Norwegian-American sociologist and economist Thorstein Veblen in the book ‘The Theory of the Leisure Class’ which was published in 1899.
It refers to consumers who purchase expensive goods in order to display their income and wealth rather than cover real needs. Flashy consumers will use conspicuous consumption behavior to gain or maintain high social status. Majority of the classes have flashy consumers and this influences and affects other classes as they seek to emulate such behavior.
The end result, according to Veblen is that of a society that is characterized by waste of money and time. Sociologically, display of such power is as a means of maintaining or attaining a specific given social status.
When Veblen first introduced the term, he was describing behavioral characteristics of the social class that arose as a
result of wealth accumulation during the 19th century as a result of 2nd Industrial Revolution. In that historical and social context, the term was used narrowly to describe the women, families and men of the upper class. They applied their wealth as a way of publicly showing off their social prestige and power whether real or perceived.
During the 20th century with significant improvement of the standards of living of a society and the emergence of middle class, the term was used to describe women, households and men who were in possession of discretionary income that made it possible for them to practice conspicuous consumption of services and goods. During this time, they were motivated by desires of prestige and publicly displaying their social status rather than intrinsic, practical utility of the services and goods they were buying.
Also in the 20th century, economist Paul Nystrom came up with the theory that suggested changes in lifestyle that was a result of the industrial revolution caused ‘pecuniary emulation’. In the 20th and 21st centuries, there was also an expansion of conspicuous consumption which was associated with narcissistic or addictive behavior induced by consumerism, rise of hedonistic expectations and immediate gratification.
Originally, conspicuous consumption was intended for those who were exclusively rich but the latest research economists such as Erik Hurst, Professor of Finance Nikolai Roussanova and Kofi Charles showed the behavior has spread widely especially among those who were of poorer social classes and those in emerging economies.
The display of wealth among these groups was used as a way of concealing the impression they were poor. A good example is that of use of oversized jewelries by those in low income groups.
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Sources
http://en.wikipedia.org/wiki/Conspicuous_consumption