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Conspicuous Consumption and
Race: Who Spends More on What
Fashionable clothes, jewelry,
flashy cars.... They are all items of
conspicuous consumption that
give their owners status on the street. |
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Some groups, such as blacks and Hispanics, seem to spend more on such
emblems of success than others. Or is that just a stereotype?
Comedian Bill Cosby has long condemned his own black community for spending
too much on flashy goods at the expense of
children's education. He has been
roundly criticized by some and praised by others, but there hasn't been much
evidence to show whether his claims are true. Those who believe spending
patterns vary among racial and ethnic groups typically invoke cultural
differences, but there hasn't been much solid evidence of that, either.
"Blacks do spend more on these things -- jewelry, clothing and cars -- that
have something to do with visibility," says Wharton finance professor
Nikolai Roussanov. "Is it just taste? Or does it have to do with a social
status component?"
Economists have long accepted the explanation for conspicuous consumption
presented by Norwegian-American economist Thorstein Veblen, who coined the
term at the end of the 19th century. Valuable possessions visible to all are
a signal of one's wealth, success and status, Veblen said. Today, most
people recognize that spending decisions are influenced by the desire to
"keep up with the Joneses."
In looking deeper at the subject, Roussanov and his collaborators, Kerwin
Kofi Charles and Erik Hurst of the University of Chicago, found some truth
to the ethnic stereotypes on spending, but they concluded that the
explanation lies in economics, not culture. Their work is described in a
paper titled, "Conspicuous Consumption and Race."
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