Social Identity, Local Neighbourhood Effect and Conspicuous Consumption: Evidence From India

Deepika Kandpal and Dibyendu Maiti ()
Additional contact information
Deepika Kandpal: Department of Economics, Delhi School of Economics

No 327, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: The quest for social status is the driving force behind many human decisions including the expenditure on conspicuous goods. Recent evidence shows that conspicuous consumption patterns vary across social groups. Further, rank-based status signalling models suggest that the income distribution of peers affects conspicuous consumption behaviour. Using recent nationally representative microdata from India, this paper investigates the caste-based inequality in conspicuous consumption patterns and the role of income distribution of reference groups in explaining these differences. We find that social identity and economic inequality are essential determinants of conspicuous expenditure. Dalits and Adivasis spend around 7% more on conspicuous items than upper caste households. Consistent with the status signalling models, we find that this gap is significantly influenced by the disparities in the average income of the reference group, within-group income inequality and the share of peers with similar income, denoted by local density. Specifically, local density is found to have a strong influence on household conspicuous consumption decisions. Key Words: Conspicuous consumption, Income distribution, Signalling, Social groups, Social Status JEL Codes: D12, D31, J15

Pages: 34 pages
Date: 2022-07
New Economics Papers: this item is included in nep-dev, nep-hme and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.cdedse.org/pdf/work327.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cde:cdewps:327

Ordering information: This working paper can be ordered from
http://www.cdedse.org/

The price is free.

Access Statistics for this paper

More papers in Working papers from Centre for Development Economics, Delhi School of Economics Delhi 110 007. Contact information at EDIRC.
Bibliographic data for series maintained by Sanjeev Sharma ().