The Price of Prestige

22 chapter one

investment in a resplendent tail guarantees a better selection of mates.

This handicap, therefore, is not wholly wasteful, because it improves the

ability of actors to signal their attributes credibly.

Pecuniary Emulation and Invidious Comparison

Veblen argues that consumption externalities produce two conflicting

processes, pecuniary emulation and invidious comparison: “Members of

the upper classes voluntarily incur costs to differentiate themselves from

members of lower classes (invidious comparison) knowing that these costs

must be large enough to discourage imitation ( pecuniary emulation)”

(Bagwell and Bernheim 1996 ). Invidious comparison is one of the main

motivations of the snob. Conversely, pecuniary emulation is the prac-

tice of those who try to “keep up with the Joneses.” The emulators will

try to adopt the consumption patterns of the upper classes even if they

have to compromise some necessities in the process. The result is never-

ending cycles of differentiation and emulation. The snob will consume

luxury goods as a means of differentiation, which will automatically make

them desirable for the Joneses despite, and sometimes because of, their

questionable functional value. For those without sufficient means, pecuni-

ary emulation can impose significant long- term costs. Canterbery ( 1999 )

describes this kind of ruinous overspending by an aspiring actor as the

“Gatsby effect,” echoing Fitzgerald’s ([ 1925 ] 1995 ) famous novel. Snobs,

therefore, have to overspend just enough in order to keep the emulators

out of reach. The ruinous consequences of the 2004 Olympic Games in

Athens provide a good illustration of an international Gatsby effect.

A notable method for blocking emulators and enabling clearer distinc-

tions of rank is through the establishments of exclusive clubs.^43 Once effec-

tive membership restrictions are in place, clubs become a form of invidious

comparison. Clubs can be formalized, as in the case of the United Nations’

Security Council or the G 8 , or they can be kept informal, as in the case of

the aircraft carrier club. Whereas in the first two examples, institutional

rules create effective restrictions on membership, the latter example relies

on the prohibitive cost of aircraft carriers as a barrier to entry. Larson, Paul,

and Wohlforth ( 2013 ) argue that club memberships create two types of

status competitions. First, actors compete to gain membership in desired

clubs. Once accepted, the competition continues within the club between

members who strive to define in- club hierarchies. Stratification therefore

exists both across clubs and within clubs. Clubs often create internal status