Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption

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 inequality, status signaling, debt, and conspicuous consump...

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Main Authors:	Banuri, Sheheryar, Nguyen, Ha
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	INEQUALITY SOCIOECONOMIC STATUS CONSPICUOUS CONSUMPTION VEBLEN GOODS ACCESS TO FINANCE HOUSEHOLD DEBT
Online Access:	http://documents.worldbank.org/curated/en/742421597065801715/Borrowing-to-Keep-Up-with-the-Joneses-Inequality-Debt-and-Conspicuous-Consumption http://hdl.handle.net/10986/34351

id	okr-10986-34351
recordtype	oai_dc
spelling	okr-10986-343512022-09-20T00:10:45Z Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption Banuri, Sheheryar Nguyen, Ha INEQUALITY SOCIOECONOMIC STATUS CONSPICUOUS CONSUMPTION VEBLEN GOODS ACCESS TO FINANCE HOUSEHOLD DEBT 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 inequality, status signaling, debt, and conspicuous consumption. It reports three main findings: First, consumption increases when it is "conspicuous" (i.e. is both observable, and signals ability/status). Second, borrowing increases when consumption is conspicuous. More critically, this increase in loan-taking is driven by those at the bottom of the income distribution. Third, in the presence of conspicuous consumption, access to finance exacerbates inequality. The results point to a vicious cycle of inequality and costly borrowing. 2020-08-13T14:48:31Z 2020-08-13T14:48:31Z 2020-08 Working Paper http://documents.worldbank.org/curated/en/742421597065801715/Borrowing-to-Keep-Up-with-the-Joneses-Inequality-Debt-and-Conspicuous-Consumption http://hdl.handle.net/10986/34351 English Policy Research Working Paper;No. 9354 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	INEQUALITY SOCIOECONOMIC STATUS CONSPICUOUS CONSUMPTION VEBLEN GOODS ACCESS TO FINANCE HOUSEHOLD DEBT
spellingShingle	INEQUALITY SOCIOECONOMIC STATUS CONSPICUOUS CONSUMPTION VEBLEN GOODS ACCESS TO FINANCE HOUSEHOLD DEBT Banuri, Sheheryar Nguyen, Ha Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption
relation	Policy Research Working Paper;No. 9354
description	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 inequality, status signaling, debt, and conspicuous consumption. It reports three main findings: First, consumption increases when it is "conspicuous" (i.e. is both observable, and signals ability/status). Second, borrowing increases when consumption is conspicuous. More critically, this increase in loan-taking is driven by those at the bottom of the income distribution. Third, in the presence of conspicuous consumption, access to finance exacerbates inequality. The results point to a vicious cycle of inequality and costly borrowing.
format	Working Paper
author	Banuri, Sheheryar Nguyen, Ha
author_facet	Banuri, Sheheryar Nguyen, Ha
author_sort	Banuri, Sheheryar
title	Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption
title_short	Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption
title_full	Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption
title_fullStr	Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption
title_full_unstemmed	Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption
title_sort	borrowing to keep up (with the joneses) : inequality, debt, and conspicuous consumption
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/742421597065801715/Borrowing-to-Keep-Up-with-the-Joneses-Inequality-Debt-and-Conspicuous-Consumption http://hdl.handle.net/10986/34351
_version_	1764480717329268736

Borrowing to Keep Up (with the Joneses) : Inequality, Debt, and Conspicuous Consumption

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