Veblen's Theory of Conspicuous Consumption

Veblen's Theory of Conspicuous Consumption, introduced by economist Thorstein Veblen in his 1899 work "The Theory of the Leisure Class," examines the ways in which individuals use consumption to signal social status. The theory posits that people engage in conspicuous consumption—buying and using luxury goods—as a means of demonstrating wealth and social prestige. Veblen argues that this behavior is not merely about satisfying needs but is driven by the desire for social recognition and differentiation from others.

The concept highlights the role of social norms and cultural expectations in shaping consumer behavior, suggesting that individuals often derive identity and self-worth from their consumption choices. Veblen's insights reflect a critique of consumerism and the social structure that encourages individuals to seek validation through material possessions. The theory remains relevant today, as it helps to explain contemporary consumer behaviors in a society increasingly defined by brand culture and status symbols. Overall, Veblen’s work invites reflection on the motivations behind consumption and its implications for social dynamics.

Published in: 2021

By: Scott Zimmer, JD

Subject Terms

Veblen's Theory of Conspicuous Consumption

Last reviewed: February 2017

Abstract

“Conspicuous consumption” is a term originated by the sociologist Thorstein Veblen to describe a form of consumer behavior that emerged in its modern form after the Industrial Revolution. Conspicuous consumption is the practice of acquiring goods or other outward symbols of wealth in order to show others how much wealth one possesses. In a sense, this behavior can be traced back to other types of status symbols used even in primitive societies, as in both the old and new practices the purpose is to demonstrate that one has a surplus of resources.

Overview

Throughout much of human history, the acquisition of material goods has had both a practical and a symbolic function. The practical function has usually been to facilitate survival or to increase comfort. For example, a pioneer might first build a log cabin in order to survive against the elements and then later construct a proper home out of milled lumber in order to live more comfortably. For some, there has also been a third step in this progression: building a mansion to dwarf the homes of other people.

This third step is not necessary in a practical sense—the mansion is far larger than would be necessary to accommodate the family that builds it—but it serves a vital symbolic function. It announces to the world that its owner has access to more resources, whether in the form of money, raw materials, or land, than others do. The acquisition of displays such as this is known as conspicuous consumption because the goods acquired are not needed in any meaningful sense; rather, they are acquired so that others can see them being acquired and realize that they themselves either do not or cannot have them. They are meant to inform others of the purchaser’s superiority (Todorova, 2013).

Up until approximately the nineteenth century, conspicuous consumption was practiced only by the wealthy, who made up an extremely small portion of society. This is because most societies were composed of a small ruling class of nobility and a large group of poor people and servants to the rulers. With the arrival of the Industrial Revolution in the nineteenth century, the middle class began to emerge and later to expand. In time, the middle class also began to practice conspicuous consumption, much to its detriment in the eyes of many observers, who have sometimes referred to it instead as “invidious consumption.”

Conspicuous consumption is usually seen as a social ill rather than in a more neutral or even favorable light. First, conspicuous consumption by its very nature is wasteful, as it involves obtaining goods that one has no real need for. These goods, even though they are unnecessary, still required natural resources and human labor to produce and transport to market, and more than likely their production also contributed to environmental pollution. To use all of this effort and to further burden the environment for an undertaking with no tangible benefits is seen as wasteful at the very least, and at the worst as an open attack on the earth’s ecosystem (Wang & Griskevicius, 2014).

In addition, conspicuous consumption has been criticized for its negative effect on society. This has been particularly pronounced since the emergence of the middle class. Prior to the Industrial Revolution, conspicuous consumption was primarily practiced by the ruling classes to remind the rest of the population of the rulers’ power and authority. The vast numbers of people living in poverty were witnesses to this conspicuous consumption but had no ability to emulate it because they could barely afford what they needed to survive.

After the Industrial Revolution, however, this all changed. The middle class represented a large number of people who possessed at least some of the resources needed to participate in conspicuous consumption. In an environment such as this, conspicuous consumption is not a behavior practiced in isolation. Instead, it takes on a competitive quality, as people see others’ conspicuous consumption and then try to “keep up with the Joneses” by engaging in conspicuous consumption of their own. The classic arena where this competitive dynamic is played out is the suburban neighborhood, where one family decides to make some sort of visible improvement—for example adding an extension onto the house or buying a new car—and before long, others in the neighborhood follow suit.

This competition eventually has a deleterious effect on relationships, as people begin to view each other not as friends or members of a community but as rivals or even enemies in the ongoing contest to have the most possessions. Many have expressed concerns that over long periods of time, the competitiveness produced by conspicuous consumption wears away at the fabric of society and increases levels of interpersonal hostility and stress.

Part of the reason for the increased stress caused by conspicuous consumption is that it frequently causes people to go further into debt than they otherwise would. In ordinary circumstances people balance their income against their needs for material goods. When conspicuous consumption is in effect, however, logic is no longer the controlling factor. Instead, people make purchases because they feel that they must in order to maintain or advance their status in the eyes of society, and purchases become tied up with one’s sense of self worth.

Psychologically speaking, a sense of one’s own fundamental adequacy and value is of great importance to one’s ability to function in society, and anything that threatens it, such as being unable to buy enough to show others that one is well off, is avoided as if it were a danger to life and limb. For this reason, people will often go into debt, continuing conspicuous consumption well past the point that their regular income and savings would allow.

Unless one’s income continuously increases, acquiring debt tends to be the only way to carry on conspicuously consuming. This pattern forces people to continuously work harder and for longer hours, pursuing more income and professional advancement so that the conspicuous consumption can be sustained. The result is a society whose members work constantly and are still drowning in debt. Often, conspicuous consumers find themselves locked in a cycle of labor and debt, the so-called rat race, in pursuit of possessions—the only purpose of which is to impress others—that they lack either the time or interest to enjoy (Thoumrungroje, 2014).

Conspicuous consumption is a drive that goes hand in hand with the more general concept of consumerism, the need to constantly buy material goods in order to validate one’s existence. Conspicuous consumption is essentially a particular manifestation of consumerism, and one that tends to operate against the best interests of society and the individual, although many in the business world view it as a less serious affliction and even essential to economic growth.

Both conspicuous consumption and consumerism have been cited as major sources of discontent with the modern world, inasmuch as detractors seek to persuade people that happiness may be attained by purchasing the proper items in the proper amounts. Conspicuous consumption has been blamed for increasing people’s hostility toward each other and creating higher levels of stress and debt for individuals (Hinz, Spann & Hann, 2015).

Further Insights

Much study has gone into the psychological implications of conspicuous consumption, in particular its connection to self-esteem and self-worth. What is of special interest about conspicuous consumption is its tendency to achieve precisely the opposite of what one expects it to produce. People expect that if they purchase a particular item, then they will experience a feeling of happiness and contentment by virtue of owning that item and of making sure that others know about their ownership of the item. In reality, this rarely occurs and when it does, the pleasant effect is extremely short-lived. What tends to happen instead is that as soon as the item is acquired, the purchaser either begins to find fault with it or discovers defects in it, and instead turns his or her attention to some new article that, once acquired, will fulfill the void within.

Psychologists note that the real motivation behind conspicuous consumption is not so much an internal need to feel better than others, but to attain a feeling of mere adequacy. Most people experience anxieties about their own accomplishments and deficiencies, and all too often their response is to try to assuage these doubts by surrounding themselves with possessions that they believe (prior to purchasing them, at least) will make them happy and free of their worries. The result is that vast numbers of people spend their entire lives pursuing possessions as a substitute for inner peace (Correia, Kozak & Reis, 2016).

Issues

Recent years have seen the cycle of conspicuous consumption take on a new twist as a result of several independent processes. On one hand, the continuous concentration of the world’s wealth into the hands of a smaller and smaller group of individuals has accelerated. At the same time, the attention devoted to social media and reality entertainment has increased at near exponential rates, with millions of people following online or tuning in to television programs to witness the exploits of wealthy celebrities indulging in conspicuous consumption.

In response, many people seek to emulate wealthy individuals on a more middle class scale by demonstrating their own conspicuous consumption, using online platforms for sharing images, videos, and other types of content. This wider distribution has made acts of consumption more conspicuous than they previously were; people photograph their engagement rings, cars, and even their restaurant meals, and then post the pictures online, spurring others to compare their own lives to that of the person posting the photos (Robison, 2016).

Of equal concern is the role that advertising plays in the perpetuation of conspicuous consumption. Traditionally, advertisers have had an extremely positive view of conspicuous consumption, because for them it represents the best possible outcome of an advertising campaign—once a commodity becomes a status symbol, that commodity virtually sells itself and much less advertising is necessary to maintain the commodity’s popularity and to keep demand for it high. The social costs of encouraging conspicuous consumption—unhappiness, poor relationships, crushing levels of debt—are, for advertisers, externalities that do not factor into their balance sheets (Hicks & Hicks, 2014). The result has been the confluence of advertising with a celebrity culture of conspicuous consumption to produce whole populations trying to live a lifestyle that is far out of their actual reach.

Only recently have there been signs that this trend may be shifting. As the generation known as millennials has come of age and encountered an economy where wages are relatively low and jobs are scarce, they have been forced into viewing frugality as a virtue and conspicuous consumption as a form of indulgence that should be avoided wherever possible. Instead, young people have begun pursuing projects based on collaboration and sharing resources. An example of this has been the emergence of smartphone applications that allow one to avoid purchasing a car and instead simply use the app to find a nearby driver who can offer transportation at a moment’s notice, for a small fee. It is not yet clear if some form of conspicuous frugality will find root in the modern psyche in the way that conspicuous consumption has (Hwang & Nagac, 2015).

Terms & Concepts

Consumerism: The psychological need to constantly buy material goods in order to validate one’s self-worth. The United States, as a consumer-driven economy, depends on consumerism—that is, the acquisition of both goods and debt—for sustained growth.

Frugality: Frugality is the practice of saving money wherever possible by avoiding unnecessary expenses and making use of creative ways to economize on necessary purchases. Behavioral studies of wealthy persons tends to show that they practice frugality more often than spending to excess, and that this in part accounts for their wealth.

Invidious Consumption: Synonymous with conspicuous consumption; some observers differentiate the two terms by emphasizing the “conspicuous” in one and the “invidious” in the other, suggesting that the wealthy buy things because they can and not necessarily because they wish to inspire envy. Invidious consumption is unambiguously for the purpose of generating negative feelings in others.

Keeping up with the Joneses: “Keeping up with the Joneses” was a comic strip published in the first half of the twentieth century, and its name has survived as a description of the practice of measuring one’s social status by comparing it with that of one’s neighbors.

Status Symbol: A status symbol is a term used to describe many of the items purchased during the process of conspicuous consumption. It is acquired not for its ostensible purpose, but to represent to others that one possesses wealth and status.

Veblen Effect: A price distortion that runs contrary to free-market theory, in which a higher (rather than lower) price results in greater consumer demand, for example, in the case of a wine buyer who overlooks lower priced wines in the belief an expensive brand will make him or her appear to be a connoisseur.

Bibliography

Correia, A., Kozak, M., & Reis, H. (2016). Conspicuous consumption of the elite: Social and self-congruity in tourism choices. Journal of Travel Research, 55(6), 738–750.

Haddadi Barzoki, M., Tavakol, M., & Vahidnia, A. (2014). Effects of sexual objectification on conspicuous consumption and materialism. Sexuality Research & Social Policy: Journal of NSRC, 11(2), 153–162. Retrieved October 23, 2016, from EBSCO Online Database Sociology Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=sxi&AN=96150184&site=ehost-live

Hicks, D. L., & Hicks, J. H. (2014). Jealous of the Joneses: Conspicuous consumption, inequality, and crime. Oxford Economic Papers, 66(4), 1090–1120.

Hinz, O., Spann, M., & Hann, I. (2015). Can’t buy me love ... or can I? Social capital attainment through conspicuous consumption in virtual environments. Information Systems Research, (4), 859.

Hwang, S., & Nagac, K. (2015). Social status, conspicuous consumption levies, and distortionary taxation. 15(4), 1705–1729.

Perry, M. D. (2015). Who dat?: Race and its conspicuous consumption in post-Katrina New Orleans. City & Society, 27(1), 92–114. Retrieved October 23, 2016, from EBSCO Online Database Sociology Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=sxi&AN=102714578&site=ehost-live

Robison, L. (2016). “The lamp in Mildred’s living room”: Cain’s Mildred Pierce and Veblen’s Conspicuous Consumption. Papers on Language & Literature, (3), 255.

Thoumrungroje, A. (2014). The influence of social media intensity and EWOM on conspicuous consumption. Procedia—Social and Behavioral Sciences, 148 (2nd International Conference on Strategic Innovative Marketing), 7–15.

Todorova, Z. (2013). Conspicuous consumption as routine expenditure and its place in the social provisioning process. American Journal of Economics and Sociology, 72(5), 1183–1204. Retrieved October 23, 2016, from EBSCO Online Database Sociology Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=sxi&AN=91535688&site=ehost-live

Wang, Y., & Griskevicius, V. (2014). Conspicuous consumption, relationships, and rivals: Women’s luxury products as signals to other women. Journal of Consumer Research, (5), 834.

Veblen's Theory of Conspicuous Consumption

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Subject Terms

Veblen's Theory of Conspicuous Consumption

Abstract

Overview

Further Insights

Issues

Terms & Concepts

Bibliography

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