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- Title
A TEST OF CONSPICUOUS CONSUMPTION: VISIBILITY AND INCOME ELASTICITIES.
- Authors
Heffetz, Ori
- Abstract
This paper shows that, consistent with a signaling-by-consuming model à la Veblen, income elasticities can be predicted from the visibility of consumer expenditures. We outline a stylized conspicuous consumption model where income elasticity is endogenously predicted to be higher if a good is visible and lower if it is not. We then develop a survey-based measure of expenditure visibility, ranking different expenditures by how noticeable they are to others. Finally, we show that our visibility measure predicts up to one-third of the observed variation in elasticities across consumption categories in U.S. data.
- Subjects
UNITED States; CONSUMPTION (Economics); ELASTICITY (Economics); UNITED States economy; PUBLIC spending; ENGEL'S law; INCOME; FOOD consumption
- Publication
Review of Economics & Statistics, 2011, Vol 93, Issue 4, p1101
- ISSN
0034-6535
- Publication type
Article
- DOI
10.1162/REST_a_00116