Measuring Conspicuous Consumption

Abstract

Approximately 15 percent of households have a negative or zero net worth, leaving them vulnerable to financial insecurity at retirement. Some are vulnerable at retirement, in part, due to their lack of saving. However, some are also at risk because of their rates of consumption, relative to their income. There have been several studies that show that Blacks and Latinos have low savings rates, in part due to higher conspicuous consumption. Conspicuous consumption is defined as the buying of goods or services solely for the purpose of public display of wealth, as opposed to covering basic needs. Unfortunately, there are few scales that assess the construct with appropriate psychometric properties. This work attempts to provide a scale by which practitioners can measure consumption/spending and thus assess the threat of financial vulnerability. The creation of adequate measures of consumption may elucidate whether the issue of financial insecurity is related to financial literacy, inability to save or consumption. Ultimately, the goal of this research is to sharpen the ability of policy makers, researchers, and practitioners in order to assist communities most at risk for financial insecurity.

Keywords: consumption, scale, wealth, literacy, poverty, retirement