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Conspicuous consumption is the term used to describe the lavish spending on goods and services that are acquired mainly for the purpose of displaying income or wealth rather than to satisfy a real need of the consumer. In the mind of a conspicuous consumer, such display serves as a means of attaining or maintaining social status.

File:Octopus on 2005 05 13.jpg

Octopus, a privately owned superyacht, is an example of conspicuous consumption.

The slang term for conspicuous consumption is bling.

Invidious consumption, a necessary corollary, is the term applied to consumption of goods and services for the deliberate purpose of inspiring envy in others.

These terms are not used descriptively for behavioral disorders such as binge eating and compulsive spending.

History and evolution of the term

The term conspicuous consumption was introduced by American economist and sociologist Thorstein Veblen in his 1899 book The Theory of the Leisure Class. Veblen used the term to depict the behavioral characteristic of the nouveau riche, a new class that emerged in the 19th century capitalistic society as a result of the accumulation of wealth during the Second Industrial Revolution. In this context, the application of the term should be narrowed only to the elements of the upper class who use their enourmous wealth to manifest their social power, whether real or perceived. In its original meaning, the term can be easily applied to the nouveau riche that rise due to rapid development of the emerging economies such as Brazil, China, India and Russia. To some extent, it can be used to describe the spending patterns of corporate managers who support their lavish lifestyles at the expense of the shareholders of the companies they manage (List of corporate executives charged with crimes).

With significant improvement of living standards and the emergence of the middle class in the 20th century, the term conspicuous consumption is now broadly applied to individuals and households with expendable income whose consumption patterns are not justified by their essential needs and thereby wasteful. Thus, the concept of conspicuous consumption has been discussed since the 1960s in the context of addictive or narcissistic behaviors induced by consumerism, the desire for immediate gratification, and hedonic expectations among the population.

In recent years, conspicuous consumption has also been viewed as a contributing factor to behavioral disorders such as binge eating and compulsive spending and is a major contributor to personal bankruptcies resulting from abuse and mismanagement of credit.

Social and economic effects

Since socio-economic status (the socially-created effects of wealth or income) is a positional good which is in fixed supply, any conspicuous consumption generates negative externalities. In fact, conspicuous consumption may be seen as the in-kind scarcity rent of socio-economic status. Minimizing economic inefficiency by capturing this rent and curbing wasteful consumption is an important argument for luxury taxes and other corrective policies. As John Stuart Mill argued:

[Luxury taxes] have some properties which strongly recommend them. In the first place, they can never [...] touch those whose whole income is expended on necessaries; while they do reach those by whom what is required for necessaries, is expended on indulgences. In the next place, they operate in some cases as [...] the only useful kind of sumptuary law. I disclaim all asceticism, and by no means wish to see discouraged, either by law or opinion, any indulgence (consistent with the means and obligations of the person using it) which is sought from a genuine inclination for, and enjoyment of, the thing itself; but a great portion of the expenses of the higher and middle classes in most countries [is incurred] from regard to opinion, and an idea that certain expenses are expected from them, as an appendage of station; and I cannot but think that expenditure of this sort is a most desirable subject of taxation. If taxation discourages it, some good is done, and if not, no harm; for in so far as taxes are levied on things which are desired and possessed from motives of this description, nobody is the worse for them. When a thing is bought not for its use but for its costliness, cheapness is no recommendation. As Sismondi remarks, the consequence of cheapening articles of vanity, is not that less is expended on such things, but that the buyers substitute for the cheapened article some other which is more costly, or a more elaborate quality of the same thing; and as the inferior quality answered the purpose of vanity equally well when it was equally expensive, a tax on the article is really paid by nobody: it is a creation of public revenue by which nobody loses.

Examples of conspicuous consumption

Possessing objects that imply great purchase cost and cost of maintenance (excessively large house, prestige vehicle, large swimming pool, horses).
Buying the latest goods to prove affinity to current fads.
Eating out at an expensive restaurant, despite economic unsuitability.
Membership in expensive country clubs or other organizations despite hardships.
Incurring heavy debt to support the purchase of status symbols.
Attending an expensive school for the sake of the school's perceived social status rather than its academic value.

References

Veblen, Thorstein. (1899) Theory of the Leisure Class: An Economic Study in the Evolution of Institutions. New York: Macmillan. 400 pp.

1994 Dover paperback edition, ISBN 0486280624
1994 Penguin Classics edition, ISBN 0140187952

External links

Theory of the Leisure Class by Thorstein Veblen' at Project Gutenberg
Thorstein Veblen: Conspicuous Consumption, 1902 at Fordham University's "Modern History Sourcebook"

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 The term ''conspicuous consumption'' was introduced by [[United States|American]] economist and sociologist [[Thorstein Veblen]] in his 1899 book ''[[The Theory of the Leisure Class]]''. Veblen used the term to depict the behavioral characteristic of the [[nouveau riche]], a new class that emerged in the 19th century [[capitalistic]] society as a result of the [[Capital accumulation|accumulation of wealth]] during the [[Second Industrial Revolution]]. In this context, the application of the term should be narrowed only to the elements of the [[upper class]] who use their enourmous wealth to manifest their social power, whether real or perceived. In its original meaning, the term can be easily applied to the [[nouveau riche]] that rise due to rapid development of the [[emerging economies]] such as [[Brazil]], [[China]], [[India]] and [[Russia]]. To some extent, it can be used to describe the spending patterns of corporate managers who support their lavish lifestyles at the expense of the shareholders of the companies they manage ([[List of corporate executives charged with crimes]]).
-With the emergence of the [[middle class]], which gradually became a dominant element in the Western societies in the 20th century, the term ''conspicuous consumption'' is now used broadly to describe any consumption pattern of an individual or a corporation that is  not justified by the essential needs of the consumer and thereby wasteful. Thus, the concept of conspicuous consumption has been discussed since the 1960s in the context of [[addiction|addictive]] or [[narcissism|narcissistic]] behaviors arising from [[consumerism]], the desire for immediate gratification, and [[Hedonism|hedonic]] expectations among the population that have seemingly become a [[Norm_(sociology)|norm]] in the modern society.
+With significant improvement of living standards and the emergence of the [[middle class]] in the 20th century, the term ''conspicuous consumption'' is now broadly applied to individuals and households with expendable income whose consumption patterns are not justified by their essential needs and thereby wasteful. Thus, the concept of conspicuous consumption has been discussed since the 1960s in the context of [[addiction|addictive]] or [[narcissism|narcissistic]] behaviors induced by [[consumerism]], the desire for immediate gratification, and [[Hedonism|hedonic]] expectations among the population.
 In recent years, conspicuous consumption has also been viewed as a contributing factor to behavioral disorders such as [[Compulsive overeating|binge eating]] and [[compulsive spending]] and is a major contributor to personal [[bankrupt]]cies resulting from abuse and mismanagement of [[Credit (finance)|credit]].