Conspicuous Consumption/Positional Goods

Synonyms

Conspicuous spending; Distinctive competition; Positional externalities; Positional goods; Positional spending; Status-seeking; Veblen goods

Definition

Conspicuous consumption refers to the consumption of goods and services motivated by considerations of relative standing, i.e., one’s position in the distribution of income, status, prestige, occupations, or any other relevant dimension. This kind of consumption is aimed at signaling such a position to other individuals. The central feature is to be visible, thus spending tends to be concentrated on goods that ostensibly signal one’s position (e.g., sports’ cars, luxury items, fancy vacation destination). Such goods are characterized as “positional,” i.e., their demand is primarily determined by individuals’ willingness to indicate their relative position within a given social context. In economic textbooks, they are labeled “Veblen goods,” after the economist Thorstein Veblen. Veblen goods are goods which demand swells in...