Conspicuous Consumption

Thorstein Veblen (1899): we buy things not solely for their functional value but to signal wealth and social status to others. The term is now often applied narrowly to luxury goods, but the phenomenon is universal.

Simler & Hanson extend Veblen's insight: we don't just signal wealth through consumption — we signal a full range of traits:

Intelligence: books, art, thoughtful purchases
Virtue: green products, ethical brands, donations
Tribal loyalty: team merchandise, political paraphernalia
Taste: aesthetically distinctive choices

The universality problem

We recognize conspicuous consumption in people above us on the social ladder — their flashy cars and enormous houses seem obviously excessive. But from the perspective of someone below us, our own consumption is equally ostentatious. The mother of six in Kolkata sees your $20 restaurant meal the same way you see a Saudi prince's yacht.

We're all conspicuous consumers relative to someone. The feeling that our own purchases are purely functional is itself part of strategic-self-deception.

Implications

"Green" products often cost more and signal virtue while delivering marginal environmental benefit — buyers are buying the signal, not the outcome
The rat race persists not because people don't have enough, but because status competition is zero-sum: no matter how much everyone has, relative position still matters
Advertising works less by informing consumers and more by associating products with desirable traits/identities

Sources

the-elephant-in-the-brain-kevin-simler-robin-hanson