Leapfrogging Over the Joneses: Can Wealth Redistribution Reduce Conspicuous Consumption By Relatively Worse-Off Consumers?

Nailya Ordabayeva, INSEAD, France
Pierre Chandon, INSEAD, France
Economists have argued that welfare redistribution may be the solution to encourage poor people to save money rather than spend it on positional goods. In three studies, we show that a more equal distribution of endowment in which most people are clustered around the mean can actually lead to more conspicuous consumption by people who are worse-off than the majority in the society. We further show that this is because conspicuous consumption enables relatively worse-off consumers to jump ahead of more people (and hence gain more status) in equal societies than in unequal ones.
[ to cite ]:
Nailya Ordabayeva and Pierre Chandon (2008) ,"Leapfrogging Over the Joneses: Can Wealth Redistribution Reduce Conspicuous Consumption By Relatively Worse-Off Consumers?", in NA - Advances in Consumer Research Volume 35, eds. Angela Y. Lee and Dilip Soman, Duluth, MN : Association for Consumer Research, Pages: 959-959.