The Price of Prestige

explaining conspicuous consumption 23

positions, such as chairperson or treasurer, which can become coveted as

part of this struggle. Competition within clubs can be intense. The smaller

number of actors diminishes the diffused aspect of prestige. In a club of

two, like the superpower club during the Cold War, status competition

can approach a zero- sum game. Actors that sit on the boundaries of club

membership — either close to gaining membership or just about to lose

it — are especially prone to engaging in competitive behavior in order to

secure their position. Higher levels of status anxiety are likely to be associ-

ated with greater propensity for conspicuous consumption.

In the absence of checks and balances, the constant tension between

pecuniary emulation and invidious consumption can lead to increasingly

insatiable spirals of consumption. Not unlike the familiar security dilemma,

increased consumption by one player can pressure other actors to increase

their own consumption.

One man’s consumption becomes his neighbor’s wish. This already means that

the process by which wants are satisfied is also the process through which wants

are created. The more wants that are satisfied the more new ones are born....

The more that is produced the more that must be owned in order to maintain

the appropriate prestige. (Galbraith 1958 , 125 – 26 )

Hence, actors need to be strategic in their decisions in order to avoid neg-

ative consumption externalities: “overconsumption [underconsumption]

exists because individuals do not take into account the negative [ positive]

effect of own consumption on jealous [admiring] others” (Dupor and Liu

2003 , 423 ). Indeed, if all actors chose to engage in conspicuous consump-

tion equally and simultaneously, the result would not affect their relative

levels of consumption; there would be no gain in prestige.^44 Hence, when

actors use conspicuous consumption as a prestige- enhancing tool, they

may generate a suboptimal equilibrium in which insatiable cycles of con-

sumption leave everyone “running to keep in the same place.”^45 Eaton

and Eswaran ( 2009 , 1101 ) find that under such conditions, an increase

in productivity tends to lead to the crowding out of functional goods in

favor of prestige goods, a perverse situation where increased productiv-

ity is inversely related to actors’ well- being: “In the limit as productivity

increases without bound, virtually all productive resources are devoted to

the production of the useless Veblen good.” To support such high levels

of consumption, actors need to work more. According to some estimates,

overworked actors who partake in the prestige “rat race” experience