Prof. Dr. Klaus Wertenbroich (INSEAD):
"Conspicuous consumption and the perceived legitimacy of income (re)distribution"
(with Barabara Briers, Vlerick School of Buisness, and Breagin K. Riley, Syracuse University)
Wednesday, December 16, 05:45pm - 07:15pm (Lecturehall Building, Seminar Room G)
“We ask whether and how consumer beliefs about the legitimacy of income inequality and redistribution affect consumer behavior, specifically the extent to which consumers engage in conspicuous consumption to signal socioeconomic status. We propose that consumers perceive and value conspicuous consumption more as a signal of status when the redistribution regime, to which they are subjected, aligns with their beliefs about whether or not income is distributed legitimately across society rather than based on accidental circumstances. Specifically, we show that consumers who consider income inequality to be legitimate value conspicuous consumption more as a signal of status when there is less rather than more redistribution, whereas consumers who do not consider income inequality to be legitimate value conspicuous consumption more as a signal of status when there is more rather than less redistribution. Support comes from a national consumer survey and four laboratory experiments. Our work extends the nascent literature on how income inequality affects consumer behavior. We show that conspicuous consumption depends on consumer beliefs about the legitimacy of income inequality and of efforts to reduce it via redistribution, not just on the level of inequality or on individuals’ own position in the income distribution.