Personal Finance

conspicuous consumption

What is conspicuous consumption?

Conspicuous consumption is the purchase of goods or services for the specific purpose of displaying personal wealth. Conspicuous consumption is a means of demonstrating one’s social status, especially when publicly displayed goods and services are too expensive for the rest of one’s class. This type of consumption is usually associated with the wealthy, but it also applies to any economic class.

key takeaways

  • Conspicuous consumption is a term coined by American economist and sociologist Thorstein Veblen.
  • Conspicuous consumption can be applied to luxury items that are easily identified as high-end, expensive.
  • Technology, cars, and clothing can all be examples of items related to conscious consumption.
  • Conspicuous consumption is usually done to show a particular social status or class.
  • While this consumption is typically associated with the wealthy, anyone from any economic class can be a compelling consumer.

Click to play to learn what conspicuous consumption is

Understanding Conspicuous Consumption

The term was coined by American economist and sociologist Thorstein Veblen in his 1889 book, Leisure class theory. This consumption is thought to be the product of a developing middle class in the 19th and 20th centuries. This group has a larger percentage of their disposable income to buy goods and services that are generally considered unnecessary.

The concept of consumerism stems from conspicuous consumption.

Examples of Conspicuous Consumption and Product Choice

Examples of conspicuous consumption are the purchase of items designed to be used as symbols of wealth, such as luxury brand labels on clothing, high-tech tools and toys, and vehicles.

Smartphones and other technologies

For example, while there are many types of high-end smartphones from major manufacturers on the market, specialized smartphones that are manufactured strictly as luxury goods are also produced.

All smartphones effectively provide the same core communication functions and have software and applications installed on them that provide many functions. However, designer smartphones are available from luxury brands like Bentley and Lamborghini. The hardware in a phone is almost always the best, but what usually sets these smartphones apart is the case, which may be made of leather, titanium or even granite. The infamous Black Diamond iPhone cost $15 million and it’s just a top-of-the-line iPhone 5 wrapped in gold, studded with gems, and including a black diamond.

supercar

A similar situation applies to limited-edition high-performance supercars designed for speed and visual appeal, but with little practical use. Such vehicles, from manufacturers such as McLaren and Bugatti, are produced in small batches and can easily cost more than $1 million apiece.

On most roads, the top speed of a supercar is usually not reachable safely or legally. Owning these vehicles can be a form of conspicuous consumption, as even owners rarely experience the full capabilities of a supercar.

special attention items

One might argue that making such a purchase guarantees that the user will have the best device available. However, there are also much cheaper versions of the same device on the market. The main purpose of sourcing such a product is to start a conversation around its acquisition and the fact that the owner has the ability to make such a luxurious purchase.

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