Conspicuous Consumption and Race

Kerwin Kofi Charles, Erik Hurst () and Nikolai Roussanov
Additional contact information
Kerwin Kofi Charles: University of Chicago and NBER.
Nikolai Roussanov: University of Pennsylvania.

The Quarterly Journal of Economics, 2009, vol. 124, issue 2, pages 425-467

Abstract: Using nationally representative data on consumption, we show that Blacks and Hispanics devote larger shares of their expenditure bundles to visible goods (clothing, jewelry, and cars) than do comparable Whites. These differences exist among virtually all subpopulations, are relatively constant over time, and are economically large. Although racial differences in utility preference parameters might account for a portion of these consumption differences, we emphasize instead a model of status seeking in which conspicuous consumption is used as a costly indicator of a household's economic position. Using merged data on race- and state-level income, we demonstrate that a key prediction of the status-signaling model-that visible consumption should be declining in reference group income-is strongly borne out in the data for each racial group. Moreover, we show that accounting for differences in reference group income characteristics explains most of the racial difference in visible consumption. (c) 2009 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

Date: 2009

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdfplus/10.1162/qjec.2009.124.2.425 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Conspicuous Consumption and Race (2007)
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: http://EconPapers.repec.org/RePEc:tpr:qjecon:v:124:y:2009:i:2:p:425-467

Ordering information: This journal article can be ordered from
http://mitpress.mit. ... me.tcl?issn=00335533

Access Statistics for this article

The Quarterly Journal of Economics is edited by Robert J. Barro, Edward L. Glaeser and Lawrence F. Katz

More articles in The Quarterly Journal of Economics from MIT Press
Series data maintained by Christopher F. Baum ().