Conspicuous Consumption and the Perceived Fairness of Income (Re)distribution

Category: Marketing Seminar
When: 10 April 2018
, 12:15
 - 13:30
Where: Campus Westend, RuW 1.201
Speaker: Prof. Dr. Klaus Wertenbroch (INSEAD)

 

Conspicuous Consumption and the Perceived Fairness of Income (Re)distribution

We ask whether and how consumer perceptions of the fairness of income inequality and of redistribution of income 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 perceptions of whether or not the level of income inequality is fair. Specifically, we show that consumers who consider income inequality as fair 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 as fair value conspicuous consumption more as a signal of status when there is more rather than less redistribution. We show that this happens because consumers with low versus high fairness perceptions of income inequality perceive redistribution of income as a mechanism that respectively restores versus destroys the fairness of income inequality because it increases or decreases equal opportunities to be economic successful. 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 perceptions of the fairness of income inequality and of redistribution of income, not just on the level of inequality or on individuals’ own position in the income distribution.

 

More details on Prof. Dr. Klaus Wertenbroch can be found at: https://www.insead.edu/faculty-research/faculty/klaus-wertenbroch

 

 

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