Abstract/Summary

The presented study explores reported rises in aspirational consumption in the developing economies and asks whether such a rise may be subject to a leveling effect seen in developed economies or not. Viewing status consumption in a generic context, the study assumes an explicit link between status goals and economic goals of the consumer. The empirical analyses then assess possible rises in consumption by examining the role of household permanent income on food and education - both of which are observed to carry a status value in sub-Saharan Africa. The three chapters in the study draw a set of independent conclusions on effects of inequality on status consumption. The equilibrium conditions discussed in the first theoretical chapter for a model of status as a position hierarchy where consumers are able to move between through social capital investments reveal that positional contests can become uncompetitive with a rise in income inequality. This first chapter highlights two types of long-term equilibria where either only rich consumers participate in status competitions or both rich and poor participate. The empirical second chapter explores the role of household permanent income on food quality in Tanzania to observe that permanent income - alongside with availability of electricity in the country - may have a segregating effect on food quality. The third chapter compares education expenses in Nigeria and Tanzania - finding that education expenses in Nigeria are more significantly influenced by local wealth levels than permanent income. In light of the two long-term equilibria discussed in the first chapter, the study highlights how a rise in expenditure on status items as a common need may contribute to rise in status consumption in developing economies when the consumption of such items is linked with perceptions of mobility.