Identity Threat and Compensatory Consumption: Psychological Mechanisms in Consumer Behavior

Xibei Wen ()
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Xibei Wen: Durham University, Department of Psychology

A chapter in Proceedings of the 2026 11th International Conference on Financial Innovation and Economic Development (ICFIED 2026), 2026, pp 1033-1043 from Springer

Abstract: Abstract In contemporary consumer societies, consumption has transcended mere material exchange to become a vital avenue for individual identity construction and psychological compensation. This paper centres on the concept of ‘identity threat and compensatory consumption’, systematically reviewing recent research developments and analysing the phenomenon through the lens of counterfeit luxury goods. Findings reveal: Firstly, identity threats (such as power deficits or social exclusion) significantly heighten individuals’ preference for symbolic goods, though their outward manifestations vary across cultural contexts. In collectivist societies, conspicuously branded luxury items are often perceived as status symbols, whereas in cultures emphasising equality and restraint, they may be viewed as ‘ostentatious displays’. Secondly, compensatory consumption is not a singular response but the interplay of multiple psychological mechanisms: social comparison and self-esteem restoration act as driving forces (GO signals), while implicit theories, personality traits, and self-control exert moderating or inhibitory effects (STOP signals). Counterfeit goods exemplify this duality: while offering marginalised groups symbolic belonging and transient solace, they simultaneously entail reputational risks and ethical dilemmas that exacerbate identity anxieties. Finally, this paper argues that interventions targeting compensatory consumption should extend beyond products and markets to encompass education, psychological counselling, and institutional regulation, thereby offering more constructive coping mechanisms. Future research should deepen its exploration through cross-cultural comparisons, longitudinal tracking, and digital consumption environments to uncover the dynamic mechanisms of compensatory consumption. This will provide theoretical underpinnings and practical insights for brand strategies, consumer education, and public governance.

Keywords: Identity Threat; Compensatory Consumption; Counterfeit Goods; Consumer Psychology (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6239-642-5_109

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DOI: 10.2991/978-94-6239-642-5_109

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