Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296237 
Year of Publication: 
2024
Citation: 
[Journal:] The Journal of Development Studies [ISSN:] 1743-9140 [Volume:] 60 [Issue:] 6 [Publisher:] Taylor & Francis [Place:] London [Year:] 2024 [Pages:] 956-974
Publisher: 
Taylor & Francis, London
Abstract: 
Conspicuous consumption, specialised consumption of high visibility but without apparent economic benefit, is reducing investment in productive assets and thus hindering economic development in low-income countries. In previous research, the phenomenon was commonly explained by status-seeking and herding behaviour. Our study follows a novel angle in testing the role of risk sharing, assuming that investment into social status is perceived to increase access to informal credits in times of crises. We conduct a random-effects hurdle model along a lab-in-the-field experiment along a sample of 197 wheat farmers in Uzbekistan, a country characterised by high levels of risk and uncertainty. Within our experimental setup, both risk attitude and real-life risk management decision are found to be significant determinants of conspicuous consumption. Our findings support the notion of a complex decision-making process with risk sharing as one important motivator. Providing first empirical evidence on the topic, our findings have implications beyond our narrowly defined study case: We argue that strengthening options of formal risk-sharing tools might remove one of the motivators for conspicuous consumption; thus, it could improve the economic welfare of low-income households worldwide by allowing for more productive investment of scarce financial resources.
Subjects: 
conspicuous consumption
peacock effect
behavioural experiment
risk management policy
resilience
climate change mitigation
JEL: 
D12
D14
I32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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