Some economists argue that consumption of publicly visible goods is driven by social status. Making a causal inference about this claim is difficult with observational data. We conduct an experiment in which we vary both whether a purchase of a physical product is publicly visible or kept private and whether the income used for purchase is linked to social status or randomly assigned. Making consumption choices visible leads to a large increase in demand when income is linked to status, but not otherwise. We investigate the characteristics that mediate this effect and estimate its impact on welfare.
Clingingsmith, D. and Sheremeta, R.M. (2015). Status and the demand for visible goods: Experimental evidence on conspicuous consumption. ESI Working Paper 15-27. Retrieved from http://digitalcommons.chapman.edu/esi_working_papers/176