Conspicuous consumption

Conspicuous consumption is buying things other people can see, partly so they will see them. The car in the driveway, the logo on the bag and the watch on the wrist do a job beyond their use: they tell observers where you stand.

That job has a price. Visible goods are seen together, so one sets a standard for the rest, and a budget slowly tilts toward what others notice and away from what only you know about. The idea sits beside keeping up with the Joneses, which is about matching the people around you, and Veblen goods, where the price itself is on show.

Going cold to look well dressed

In 1899 the American economist Thorstein Veblen published The Theory of the Leisure Class in New York. He set out to explain why the well-off spend so much where others can watch, and along the way gave the language the phrase conspicuous consumption, the title of one of his chapters. Others carry titles like “Pecuniary Emulation” and “Conspicuous Leisure.”

His central claim was blunt. Having money is not enough; it has to show. “The wealth or power must be put in evidence, for esteem is awarded only on evidence,” he wrote. Spending on valuable goods, in his account, was how a gentleman of leisure kept his reputation. And as a fortune grew, one man’s own consumption could no longer display all of it, so friends and rivals were drawn in through valuable presents, expensive feasts and entertainments.

Veblen saved some of his sharpest lines for clothing. Dress had an edge over other kinds of display, he argued, because “our apparel is always in evidence and affords an indication of our pecuniary standing to all observers at the first glance.” He held that most of what all classes spend on clothes buys a respectable appearance, not protection. People would go without comforts and even necessities to afford a decent amount of display, so that in a cold climate they went “ill clad in order to appear well dressed.”

Veblen’s book is an argument, not an experiment. It offers no measurements, only a close observer’s account. But its core idea, that spending is partly a message to an audience, is one later researchers set out to test. One point stands out for shoppers: clothes are always on view, which makes them the easiest place for display to creep into a budget.

Who is watching, and how loud the logo is

Using nationally representative US spending data, the economists Kerwin Kofi Charles, Erik Hurst and Nikolai Roussanov found in 2009 that Black and Hispanic households put larger shares of spending into visible goods (clothing, jewelry and cars) than comparable White households. They traced most of it to status signaling rather than to differences in taste. Within each group, the visible share fell as the income of a household’s reference group rose, and accounting for that explained most of the gap. Visible spending depends on who is watching.

In 2010 the marketing researchers Young Jee Han, Joseph Nunes and Xavier Dreze studied how prominent a logo is. Wealthy buyers with little need for status paid more for quiet goods only insiders recognize. Status-hungry wealthy buyers chose loud logos, and status seekers who could not afford luxury bought loud counterfeits.

Why being seen feels necessary

Veblen gives the first reason: people award esteem on evidence, and visible goods are evidence. Charles, Hurst and Roussanov add that the evidence is read by an audience, the people you compare yourself with, so what feels like enough display depends on who they are.

The third reason makes display feel urgent. The psychologists Thomas Gilovich, Victoria Husted Medvec and Kenneth Savitsky had people put on a T-shirt with a flattering or potentially embarrassing image, and the wearers overestimated how many observers could recall it. They called this the spotlight effect: we anchor on our own vivid experience and adjust too little for other people’s view. Believe you are watched more than you are, and display feels necessary.

How one visible buy recruits the rest

Say you buy a $25,000 car and park it where the whole street can see it. Beside it, the rusty $150 bike against the garage looks tired, so you buy a $600 one. The porch chairs, which never bothered you, now sit next to a shiny car, so a $700 patio set follows. Then the faded jeans you drive in feel wrong, and $200 goes to new clothes. This is the Diderot effect with an audience. Diderot’s new scarlet robe made the rest of his study look shabby, so he replaced it piece by piece (the full story). Your street sees the car, the bike and your clothes together, so each visible purchase raises the bar for the rest. Being seen turned one purchase into four.

Where display collects in a budget

Display gathers in the spending other people can see:

• Logos and visible branding. A large mark turns a bag or jacket into a sign others can read from across the room.
• Cars, clothes and shoes. These are seen first and most often, which is why Veblen singled out dress.
• Phones and watches. They are small, but held in hand or worn on the wrist all day, in full view at every meal and meeting.
• The rooms guests see. Front yards, entryways and living rooms get the upgrades while the closet and the furnace wait.
• Celebrations, gifts and posts. Veblen saw presents and feasts as display; photos of new purchases online carry the same message to a wider audience.

How to turn down the volume

1. Run the “nobody sees it” test. Before any purchase others will notice, ask whether you would still buy it if no one ever knew you owned it. If not, you are paying for an audience.
2. Give visible and invisible spending separate budgets. Split your monthly fun money into two lines, things others see and things they do not, and watch which one runs over.
3. Choose the quiet version. Pick the model with a small logo or none, so it does not set a new standard for everything near it.
4. Dress in repeats. Wearing the same good pieces often costs less, and the spotlight research suggests fewer people notice than you think. Our guides to why basic is not boring and uniform dressing show how.
5. Wait 30 days on visible upgrades. List the new phone, watch or patio set and follow the 30-day rule. If you still want it with no one in mind, buy it.

When being seen is worth paying for

Some visible spending earns its keep. A well-fitting outfit for a job interview, a clean, presentable home for guests you care about, or a gift that shows care all carry a message someone needs to receive. Wanting to be judged well is not vanity. It is how people work, Veblen’s leisure class and the rest of us alike.

The trouble is an audience that is vague or imagined, or a display that crowds out what you need. So before you pay to be seen, ask two questions. Who exactly is the audience? And would the purchase still be worth it to you if that audience never saw it? If you can name the people and they matter to you, the display is doing real work. If you cannot, let the second answer decide.