Conspicuous And Invidious Consumption

From The Motly Fool

The economist Thorstein Veblen is best known for the expression "conspicuous consumption" which describes the kind of lavish spending which is primarily performed for the purpose of displaying income and wealth. Veblen was arguably the first economist to look at luxury goods in any detail and he showed that a great deal of spending on luxury goods is for what he describes as "invidious consumption" where the purchaser intends to display the goods to create feelings of envy in those who see their purchases.

If you've sat through someone's wobbly videos and badly-shot photographs of their expensive holiday, it probably wasn't to give you any great insights into the local architecture and culture. Part of the reason for taking the holiday was for invidious consumption and the holidaymakers must tell others to make them envious! :-) Invidious consumption can be seen everywhere from people flashing their "bling" to telling your friends about your new pair of shoes ;-)

Someone who spends £500 on a bottle of wine does so, in part, to convince themselves that they are in an elite club. Just don't show them the research published in the April 2008 issue of the Journal of Wine Economics which showed that that the vast majority of wine consumers cannot tell the difference between cheap and expensive wines :-) Most people are better off with a £4.99 bottle from Tesco.

Conspicuous consumption and housing

In the U.S., a trend in 1950s towards large houses began, with the average size of a home about doubling over a period of 50 years. This trend has been compared to the rise of the SUV, also often a symbol of conspicuous consumption. **Such large homes can also facilitate other forms of consumption, in providing extra storage space for vehicles, clothes, and other objects. (!!)

** I find this both hilarious and sad at the same time. Just MHO.