Household Saving, Class Identity, and Conspicuous Consumption

Abstract

The saving rate for U.S. households has long been low relative to those in other wealthy countries and in recent decades this rate has plummeted. Most studies of household saving behavior are based on the life-cycle theory of saving. However, there is doubt as to whether these studies adequately explain the low and declining rate in the United States. This study explores two hypotheses that depart from the life-cycle explanatory framework. The first hypothesis examines the possibility that the low rate of household saving in the United States is related to Americans' strong belief that vertical mobility in the United States is readily possible and hence their relatively weak sense of class identity. A second corollary hypothesis is that in an economy in which a high degree of vertical mobility is thought possible, a high degree of inequality in the distribution of income and wealth may reinforce the tendency to save little.

The Socio-Economic Empowerment Assessment: Addressing Poverty and Economic Distress in Clients

“…These feelings of powerlessness often lead to the poor and the non-poor engaging in behavior linked to a cognitive behavioral process that eases the sense of powerlessness, such as aspirational spending, conspicuous consumption and mood repair behavior. In turn, these activities can create a high level of debt, cyclically decreasing their ability to save money (Danziger 2004;Guidolin and La Jeunesse 2007;Wheeler-Brooks and Scanlon 2009;Wisman 2009). …”

“…First, conspicuous consumption is described as ''invidious comparison'' meant to distinguish one's status above others. Second, there is ''pecuniary emulation'' in which one copies the consumption practice of those with higher income status in order to create the illusion of sharing that status (Veblen 1994;Wisman 2009). While this latter practice may resemble ''keeping up with the Joneses,'' it is not just a manner by which low-income people distinguish themselves from even lower income people, it is also a cognitive-behavioral informed process that is based on psychological well-being, social position, and life circumstances.…”

What the American Elite Won over the Past 35 Years and What All Other Americans Lost

“…For an extended discussion of Veblen's theory of consumer behavior applied to U.S. saving behavior, see Brown (2008) and Wisman (2010). An empirical study by Bertrand and Morse (2013) finds that middle-income households (between the 20th and 80th percentile of the income distribution) consume a greater portion of their income when confronted with the income and consumption of those with higher income, and that they would have saved 2.6-3.2 percent more by the mid-2000s if the top fifth of households had grown at the same rate as median income (2013).…”

Social anxiety and attitude towards conspicuous consumption in sixth and seventh grade primary school students

“…Veblen takođe uočava da je moda odevanja tipičan oblik upadljive potrošnje, ispoljavanje načela koje on naziva "novčana lepota"; što zapravo znači da je ono što je skupo ujedno i lepo. Upadljiva ili statusna potrošnja do sada je bila uglavnom predmet interesovanja ekonomista (Wisman, 2009) tako da postojeća psihološka literatura ne obiluje radovima čiji je cilj bio da objasne ovu vrstu potrošačkog ponašanja (Truong, 2010). Naša dosadašnja istraživanja ispitivala su povezanost odnosa prema upadljivoj potrošnji i različitih psiholoških konstrukata.…”