Conspicuous consumption: Vehicle purchases by non-prime consumers

Wenhua Di and Yichen Su

Journal of Economic Behavior & Organization, 2024, vol. 224, issue C, 895-914

Abstract: Lower-income consumers who seek to increase their perceived social status or to emulate their wealthier peers may be motivated to purchase conspicuous luxury goods. Using a vehicle financing dataset, we find that non-prime consumers value vehicle prestige more than the average consumer. The stronger preferences for prestige lead non-prime consumers to purchase more expensive vehicles than they otherwise would. The preferences for prestige are driven both by status signaling and peer emulation motives. Furthermore, we show that larger vehicle purchases financed by auto loans lead to worse loan performance and credit standing for non-prime consumers.

Keywords: Conspicuous consumption; Status; Emulation; Automobile; Show off; Vehicles; Auto loan; Creditworthiness; Non-prime (search for similar items in EconPapers)
JEL-codes: D12 G51 L62 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:224:y:2024:i:c:p:895-914

DOI: 10.1016/j.jebo.2024.06.025

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