One More Round on Conspicuous Consumption

Wilkinson’s latest post argues that the poor who squander their resources on competition over appearances should take more personal responsibility for their spending decisions. In response, I’d like to point out that there is a difference between a policy perspective and a perspective of individual choice. I thought we were talking policy here, and not giving advice to individuals. As modest Midwesterners, I’ll bet Wilkinson and I would give the same advice to people of all classes engaged in competitive consumption: don’t do it — it’s a waste of money and an exercise in empty vanity. Still, from a policy perspective it’s worth noting that collective action problems can (a) make it difficult for individuals to make the best choices and (b) impose high costs on people. Competitive consumption is a kind of collective action problem. Many people find it hard to resist when they see how their peers mete out costs and benefits in this game. And even if, in central regions of this country, this game is not played vigorously, in many other regions — notably, Southern California, Florida, and the urban-suburban-exurban Northeast, it is played with alacrity, and with cruel results. In the end, it’s a negative-sum game, which, as Robert Frank argues, offers opportunities for public policy to intervene with positive outcomes all around. My point about squeezing the differences between the top and bottom of the income distribution is that this can change the dynamics of the recognition game, by making it more difficult for all classes to distinguish themselves through consumption alone, and making it look more foolish as well, since everyone is more vividly aware of what is being sacrificed in trying to keep up appearances. The quest for distinction is not extinguished, but at least it can be channeled into more worthwhile outlets.

Also from This Issue

Lead Essay

  • Economic Inequality and the Mirage of Injustice by Will Wilkinson

    In his lead essay, Will Wilkinson observes what he believes is a poor chain of reasoning: Income inequality is rising; it is also a measure of injustice. To fix this injustice, we should redistribute incomes. Wilkinson attacks this reasoning on several fronts: Income inequality is less important than consumption inequality, and consumption inequality is probably lessening. But if income inequality is a problem, it is so only as a symptom of a different problem: substandard schools, perhaps, or our high incarceration rate, or CEOs who conspire to overpay one another. Rather than redistributing income, we should identify the underlying problem and fix it directly. This may well lessen income inequality, and it will also fix an undoubtedly serious problem somewhere else in our society.

Response Essays

  • Is Consumption the Grail for Inequality Skeptics? by Lane Kenworthy

    Lane Kenworthy argues that income inequality is indeed important, and that we should not be misled by the relatively reassuring data on consumption. Unconsumed income also adds to the quality of life enjoyed by the rich, even if that increase is still hard to measure. A more egalitarian society need not entail a radical social leveling, but it should entail better public services for the poor and the middle class.

  • Why Things Will Feel Worse As They Get Better: The Downside of Growing Consumption Equality by John V. C. Nye

    John Nye adds several considerations to the mix: First, positional goods may make us feel more unequal – there are only so many “top ten” schools for our kids, only so many “best” views or neighborhoods. Yet, with rising incomes, more of us feel that we should be able to afford them, even as they slip further from our grasp. As we become more equal, we feel less equal. Second, one other effect of relative equality has been to erode the security formerly enjoyed at the very top of the economic pyramid. This security itself was a form of compensation, and executive salaries may be rising in recent years in part because executive security has fallen. And third, much of human inequality is not directly measurable in money at all. Differences in appearance, intelligence, ability, and the like are all real and may translate into economic inequality as well. Consideration of these elements is curiously absent from many discussions on inequality.

  • What Should Egalitarians Want? by Elizabeth Anderson

    Elizabeth Anderson agrees with Wilkinson that the root causes of inequality are more troubling than inequality taken alone. But economic inequality is still a problem for two reasons: First, economic inequality of the sort we have today is not making the poor better off in absolute terms, but rather it is making them worse off. And second, economic inequality translates directly into inequality of political power, which in turn reinforces economic inequality. This is an unacceptable state of affairs.

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