The Nexus Between Conspicuous Consumption and Credit Cards: Evidence from Turkish Households

Gizem Acet Dönmez and Hurşit Güneş

Journal of Economic Issues, 2024, vol. 58, issue 3, 776-792

Abstract: Overconsumption and overborrowing are prevailing problems in many countries nowadays. The conspicuous consumption phenomenon, first asserted by Thorstein Veblen in the late nineteenth century, can play an important role in explaining the current excess consumption and may have a connection with the spread of credit cards. This study aims to reveal the nexus between credit card use and conspicuous consumption expenditures of households in Turkey where credit card debts are massive. For this purpose, a Tobit model is carried out utilizing micro-level data from the Household Budget Survey for the year 2019. Findings reveal that possession of credit cards is associated with a 25% increase in conspicuous expenditures of households on average after controlling for household income and demographic characteristics. Once households are grouped by income, credit card use is associated with a higher level of conspicuous expenditures for households just below the highest income group and households just above the lowest income group. This finding implies that while the former group purchases more conspicuous products relying on credit cards to look like the highest income group, the latter group probably does that to distinguish themselves from the lowest income group.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:mes:jeciss:v:58:y:2024:i:3:p:776-792

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DOI: 10.1080/00213624.2024.2382023

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