Borrowing to keep up (with the Joneses): Inequality, debt, and conspicuous consumption

Banuri, Sheheryar and Nguyen, Ha (2023) Borrowing to keep up (with the Joneses): Inequality, debt, and conspicuous consumption. Journal of Economic Behavior & Organization, 206. pp. 222-242. ISSN 0167-2681

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Abstract

The quest for status is a powerful motivator, but does it affect inequality? This paper presents a novel lab experiment that was designed and conducted to identify the relationship between conspicuous consumption, access to credit, and inequality. We report four main findings: First, consumption increases when it is “conspicuous” (i.e., is both observable and signaling ability). Second, costly borrowing increases when consumption is conspicuous. Third, the increase in costly borrowing is driven by those at lower income levels. Finally, in the presence of conspicuous consumption, access to credit exacerbates inequality.

Item Type:	Article
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Centres > Centre for Behavioural and Experimental Social Sciences Faculty of Social Sciences > Research Groups > Behavioural Economics Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict Faculty of Social Sciences > Research Groups > Behavioural and Experimental Development Economics
Depositing User:	LivePure Connector
Date Deposited:	23 Jan 2023 16:31
Last Modified:	12 Jun 2023 08:34
URI:	https://ueaeprints.uea.ac.uk/id/eprint/90727
DOI:	10.1016/j.jebo.2022.12.001

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