Conspicuous Consumption Reflects How Redistribution Influences Perceived Social Justice

The market-based economies in the United States and Western Europe face what has been called a crisis of legitimacy. At the heart of this crisis lie questions about the extent to which unequal rewards and the resulting inequality of incomes in society are justified and deserved. The wealth gap between the top one percent of U.S. earners and the rest of society has more than doubled in the last 20 years (The Economist 2011), while growth rates of Western economies have slowed. Among calls for increasing taxes on higher earners to reduce income inequality and fiscal debt, policy makers have to stimulate consumer spending. To inform this debate, we examine whether perceptions of, and preferences for, status consumption as a reliable signal depend on redistribution preferences and their mutual association with just-world beliefs (BJW; Lerner 1980), specifically beliefs about how deserved variations in people’s income are. Status consumption, also conspicuous consumption (Veblen 1899), is a meaningful signal of status only when it involves exerting effort or incurring other costs to obtain the signalled status (Grafen 1990; Miller 2009; Spence 2002). For example, Nelissen and Meijers (2011) found that the social benefits of wearing conspicuous clothing disappear when participants are aware that the clothes are not the beneficiary’s own, that is, when the beneficiary did not pay for the clothes. Status—and conspicuous consumption as a signal of status—is not meaningful when it is undeserved, that is, when it does not reflect exerted effort (Drèze and Nunes 2009).