Conspicuous Consumption and Its Informational Functions

Abstract

The article deals with the institution of conspicuous waste and focuses on its functions and its role in constructing and spreading information in the community. First part of the article provides a detailed consideration of the classical theory of conspicuous consumption by Veblen and highlights his views regarding the social impact of conspicuous waste, as well as his concept of social evolution of institutions. This part also analyses the split of conspicuous waste into luxury consumption and conspicuous leisure that Veblen introduced in his “The Theory of the Leisure Class”. Second part of the article offers a thorough analysis of the informational functions of conspicuous consumption and compares them with similar functions of gift-exchange. It considers creation and preservation of information through economic practices of conspicuous waste, as well as the impact that information spreading has on utility. Classic Veblenian position on conspicuous waste is compared with communicative theory by Douglas and Isherwood and with the concept of symbolic capital by Bourdieu. This comparison creates a basis for a synthesis of the obtained conclusions regarding the nature of symbolic utility, derived through informational functions of conspicuous consumption, and the concept of heuristics, suggested by Kahneman and Tversky. The final part of the article applies the conclusions to the analysis of motivation of individuals who take loans for conspicuous consumption goods.