Why People in Unequal Countries Tend to Show Off More

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Research in behavioural economics, sociology, and psychology shows a strong link between economic inequality and status signalling (showing off wealth, luxury goods, branded items, lifestyle, physical appearance, etc.).

This happens for three main reasons. First, greater inequality leads to higher pressure to signal social status. When the income gap is large, people feel more aware of where they sit in the social hierarchy, higher pressure to avoid looking “poor”, and higher motivation to display signs of success. 

This is called status anxiety. According to Wilkinson and Pickett (2010), in unequal societies, people’s perceptions of inferiority or status anxiety are increasing as the inequality is a relative experience; people evaluate their well-being compared with a reference point. 

Second, inequality increases competitive consumption, where in unequal countries, consumption becomes a means of competing, not just a way of living. People buy things because of what they signal, not what they provide; hence, luxury goods become a way to show one’s place in society.

A study by Charles, et.al. (2007) found that a larger share of expenditure on visible goods (clothing, jewellery, and cars) in one community is associated with lower spending on items like health and education, as well as their lower rates of wealth accumulation. 

Third, in countries with high levels of income inequality, people frequently engage in showing off or conspicuous consumption as a form of impression management to signal high status, which in turn helps them gain respect, trust, or opportunities. This behaviour is driven by the need to navigate stark social hierarchies where visible markers of wealth are used to distinguish oneself from the lower class. 

According to Goffman (1959), who was the first to develop a specific theory concerning self-presentation, when people enter the presence of others, they communicate information by verbal intentional methods and by non-verbal unintentional methods.

The verbal intentional methods allow us to establish who we are and what we wish to communicate directly. On the other hand, people use non-verbal clues to determine how to treat a person, and similarly, most people give off clues that help to represent them in a positive light, which tends to be compensated for by the receiver (TS).

References:

Wilkinson, R., Pickett, K. (2009). The Spirit Level. New York: Bloomsbury Press

Charles, KK, Hurst, E, Roussanov, N, (2007), Conspicuous Consumption and Race, NBER Working Paper No. 13392. September 2007. https://www.nber.org/system/files/working_papers/w13392/w13392.pdf

Goffman, E. (1959). The presentation of self in everyday life. The Overlook Press.

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