Conspicuous consumption and income inequality in an emerging economy: Evidence from India
(2015). Marketing Letters, 26(3), 279–292.
Cited 89 times · OpenAlex, 2026-11-07
In short
The paper looks at how income inequality affects the share of household spending that goes on status goods in India. Higher inequality goes with more spending on conspicuous goods, especially among relatively poor households and those in rural areas, where other ways to signal status are harder to come by. Marketers and policymakers working in emerging markets should expect inequality to shift spending toward status.
Abstract
The impact of income inequality on conspicuous consumption has been a topic of much discussion, but little empirical examination in the emerging market context. In this paper, using data from the India Human Development Survey (2004–2005) and employing simple regression framework, we examine the effect of income inequality on conspicuous consumption in Indian households. We also empirically examine whether the relationship between inequality and conspicuous consumption changes with a household’s relative wealth status. Drawing on existing literature, we hypothesize that low-income and rural groups are likely to engage in higher conspicuous consumption due to the reduced attractiveness of alternate mechanisms to signal status (like professional titles and educational qualifications) as well as the absence of well-functioning financial institutions that might inhibit “status seeking” savings. Consistent with this hypothesis, our results suggest that increased income inequality is associated with an increased spending on conspicuous consumption as a share of total spending, with the associated response being higher for relatively low-income households and those living in rural settings. Our findings have significant policy and marketing implications in emerging markets like India.
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