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Conspicuous consumption and household indebtedness
Author(s) -
Lee Kwan Ok,
Mori Masaki
Publication year - 2021
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.12305
Subject(s) - conspicuous consumption , debt , credit card , consumption (sociology) , socioeconomic status , economics , carry (investment) , subsidy , subsidized housing , household debt , veblen good , household income , public housing , business , demographic economics , finance , economic growth , sociology , market economy , geography , microeconomics , demography , archaeology , social science , population , emerging markets , payment
Using a novel, large data set of consumer transactions in Singapore, we study how conspicuous consumption affects household indebtedness. The coexistence of private housing (condominiums) and subsidized public housing (Housing Development Board [HDB]) allows us to identify conspicuous consumers. Conditional on income and other socioeconomic characteristics, those who choose to reside in condominiums—considered a status good in Singapore—are likely to be more conspicuous than their counterparts living in HDB units. We find that condominium residents spend considerably more (by 25%) on conspicuous goods but not differently on inconspicuous goods. Compared with their matched HDB counterparts, these consumers with higher conspicuous motivation carry 7% more credit card debt and 108% more delinquent credit card debt. Our results suggest that status‐seeking‐induced conspicuous consumption is an important determinant of household indebtedness.