In 1899, Thorstein Veblen introduced his theory of “conspicuous consumption,” observing that people spent money to impress others. If pop lyrics are any indication, they still do. See Lorde’s song “Royals,” which notes the popularity of fancy champagne, luxury cars, and jeweled watches: “Everybody’s like, ‘Cristal, Maybach, diamonds on your timepiece.’ ”
What explains the enduring appeal of luxury goods? For one thing, they command deference. Dutch researchers reported in 2011 that people are more compliant toward someone wearing a respected brand’s logo, donating greater amounts to a charity when solicited by that person and offering more money to that person in an economics game [1]. According to a study published this year, those who believe society should be stratified by status are more likely to see the appeal of prestigious brands. The study’s authors also found that students in China like status brands more than American ones do, a difference they linked to greater respect for social hierarchy among the Chinese students. The strong Chinese market for luxury products, they suggest, may result from more than prosperity [2].
A study by a pair of business-school professors found that when subjects were made to feel a lack of social power, they were willing to pay more for high-status goods, presumably to compensate for lower status [3]. Perhaps this is why blacks and Hispanics—groups that have historically had lower social status than whites—spend more on clothing, jewelry, and cars than do whites of comparable income [4].
Sex plays a role, too. Testosterone levels, which are known to increase after a man wins a competition, have also been found to rise after he drives a sports car [5]. A 2011 paper reported evidence that men use conspicuous consumption to woo women, though primarily when seeking short-term hookups. In turn, women seemed to find a man driving a Porsche more appealing than one driving a Honda, but only for a fling (resources are attractive, the researchers reasoned, but flashy spending may not boost a partner’s long-term desirability) [6].
Women may use luxury goods as a signal to other women, or so suggests a study published in February. Flaunting such items could be a mate-guarding tactic: the researchers found that other women are less likely to try to “poach” a man who buys his girlfriend expensive outfits and accessories [7].
Finally, not all that’s gold must glitter. A marketing study reported that people with resources but no strong desire for status—say, those with old money rather than new money—prefer products with quieter logos. And companies can charge a premium for such products: all else equal, the more expensive the Gucci bag, Mercedes, or Louis Vuitton shoes, the smaller the brand marking [8]. Of course, among those in the know, subtly branded products are no less conspicuous. So why the coded language? Maybe the elite don’t want others copping their style, lest it end up for sale on a street corner. Got your Chenel right here.
The Studies:
[1] Nelissen and Meijers, “Social Benefits of Luxury Brands as Costly Signals of Wealth and Status” (Evolution and Human Behavior, Sept. 2011)
[2] Kim and Zhang, “The Impact of Power-Distance Belief on Consumers’ Preference for Status Brands” (Journal of Global Marketing, 2014)
[3] Rucker and Galinsky, “Desire to Acquire” (Journal of Consumer Research, Oct. 2008)
[4] Charles et al., “Conspicuous Consumption and Race” (The Quarterly Journal of Economics, May 2009)
[5] Saad and Vongas, “The Effect of Conspicuous Consumption on Men’s Testosterone Levels” (Organizational Behavior and Human Decision Processes, Nov. 2009)
[6] Sundie et al., “Peacocks, Porsches, and Thorstein Veblen” (Journal of Personality and Social Psychology, April 2011)
[7] Wang and Griskevicius, “Conspicuous Consumption, Relationships, and Rivals” (Journal of Consumer Research, Feb. 2014)
[8] Han et al., “Signaling Status With Luxury Goods” (Journal of Marketing, July 2010)