In fact, we can look at the other factors as side causes that only exasperate the inherent human nature. These psychological elements have been present throughout human history – demonstrating them as the key factor over and above the others. This is driven by psychological aspects – mainly the desire for peer recognition and higher social status.Īccording to Veblen’s original theory, both peer recognition and higher social status were the two main factors contributing to conspicuous consumption. However, there is a tendency for a significant percentage of consumers to engage in conspicuous consumption. It must be said that humans have very different world views, so whilst some see conspicuous consumption as a necessity, others don’t. That leaves a higher level of disposable income for individuals to pursue other forms of consumption. Advances in agriculture and technology have meant that the production of necessities such as food and water have become cheap. Economic AdvancementĬonsumers today can afford to spend conspicuously due to the material advancement seen in society. So in a circle of spending, both business and governments want people to spend more. Governments want consumers to spend as it stimulates the economy and makes them look good. The argument is that capitalism encourages extravagant spending through advertising and marketing. Instead of buying luxury products such as a new Ferrari or the latest Gucci bag, that money would be best served in helping the poor achieve their basic needs. It is argued that capitalism only enhances the desire for people to acquire more goods and services in an ever-increasing amount. Capitalism and ConsumerismĬapitalism faces a lot of criticisms and at the forefront of these is the apparent rise of consumerism. We can look at other factors as variables that exasperate and enhance conspicuous consumption. With that said, the desire for peer recognition and higher social status are key causes of conspicuous consumption – even though it might not apply to everyone. The reality of the situation is that it largely depends on the individual. Many rich people such as Mark Zuckerberg operate on a very low-key, modest lifestyle – wearing just jeans and a shirt, whilst driving a basic family car worth $30k. So what truly causes conspicuous consumption? We have briefly touched on the fact that it may be an inherent characteristic in humans, but that is not necessarily the case. It fulfills no basic human need and is an extravagant expenditure that is not needed. The decision to purchase a $50 million painting to sit on the wall can be considered highly irrational by most. In the case of conspicuous consumption, people are driven from the normal ‘rational’ economic model, towards what can be seen as irrational decision making. However, economists also need to consider the psychological factor which is purely emotional. For instance, when prices rise, demand falls. ![]() In economics, a lot of the study evolves around rational behaviour. Whilst the desire for peer recognition and higher social status are drivers of conspicuous consumption, other factors include social media, consumerism, and economic advancement.According to Veblen, the main cause of conspicuous consumption is mainly the desire for peer recognition and higher social status.Conspicuous consumption is where consumers purchases goods and services purely to highlight their wealth to others.In a way, it reflects the naturally competitive nature of us as humans. If you are richer than everyone down your street, you may feel like you are superior. For instance, the need to flaunt wealth can be seen as a sign of establishing self-esteem and self-worth. We find throughout history there was a need to show superiority through a display of wealth.Īs conspicuous consumption can be seen throughout history, it is argued that it may be an inherent characteristic within humans. For instance, if we look at the huge, extravagant expenditures by Kings through Europe and the needless gold and silver-plated armour of noblemen. He notes that conspicuous consumption has been around for centuries, if not millennia. ![]() The theory of conspicuous consumption was originally coined by American economist, Thorstein Veblen, in his book, “The Theory of the Leisure Class”. Examples might include designer clothing, sports cars, and gold-plated furniture. In other words, they buy expensive items that are not needed but are bought solely to display their wealth and power to the world. Last Updated OctoWhat is Conspicuous ConsumptionĬonspicuous consumption is where the consumer spends excessive amounts in order to highlight their wealth to society.
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |