Conspicuous Consumption and Peer Effects among the Poor: Evidence From a Field Experiment

Christopher P Roth

No 2014-29, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: I use a randomised conditional cash transfer program from Indonesia to provide evidence on peer effects in consumption of poor households. I combine this with consumption visibility data from Indonesia to examine whether peer effects in consumption differ by a good’s visibility. In line with a model of conspicuous consumption, I find that the expenditure share of visible (nonvisible) goods rises (falls) for untreated households in treated sub-districts, whose reference group visible consumption is exogenously increased. Finally, I provide evidence on the mechanisms underlying the estimated spillovers using data on social interactions and social punishment norms. In line with Veblen’s (1899) claim that conspicuous consumption is more prevalent in societies with less social capital, I show that the peer effects in visible goods are larger in villages and for households with lower levels of social activities.

Keywords: Conspicuous Consumption; Peer Effects; Relative Concerns; Spillovers; Social Interactions; Social Norms (search for similar items in EconPapers)
JEL-codes: C21 D12 I38 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-dev, nep-exp, nep-pke, nep-sea, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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