The Influence of Culture on Conspicuous Consumption



Conspicuous consumption – the idea of consuming as a signal of value to others – is something I always struggled to understand. Not because the concept is difficult, it isn’t, but because I’m Dutch. And in the Netherlands, the idea of blowing through money to show other people that you have money is a bit, weird. When I then moved to the UK, especially as I was still a student, the idea of spending money on branded or luxury items as a value signal was still pretty foreign to me. But as my university was also frequented by a lot of non-European students, I saw conspicuous consumption a lot more. Now, as I’ve moved to Sydney, I am surrounded by people decked out head to toe in nothing but brands, labels and luxury. A basic white t needs to set you back at least $200 (AUD) to be considered decent. I don’t think I’ve seen a purse without a brand yet either. Very different climate.


Now for those of you who don’t know Sydney that well, Sydney, to me, is not a city. It’s a massive agglomeration of different villages. And each village has its own vibe. The more you move to the West (away from the coast) the more normal the people become. This is where families, starters and just regular people live. The more to the center and then the east you go, the wealthier people get. Apartments here sell for millions, even if they only have a single bedroom. Very similar to central London or New York, if you wanted different examples. As a behavioural scientist, I am vaguely aware of my surroundings and their impact on my own preferences and behaviour. However, I didn’t imagine the high levels of conspicuous consumption would have hit me as hard as they did. As I mentioned before, I don’t see many unbranded purses. Reason for this is simple, I live centrally (is easier for work, I’m most definitely not rolling in it). Because of my geographic location, I am exposed to the “wealth” of others, meaning their conspicuous consumption almost constantly. The closest shopping area to me is Westfield (and I do love to shop) and everything surrounding Westfield is high end luxury. Honestly, I’m still looking for a Kruidvat (UK: Superdrug, US: Walgreens) but all I get here is high market, luxury stores who will charge me hundreds for a branded band aid. Let alone what they’ll charge me for a facial cream… If that’s the default, it’s kinda hard to stay “normal”. And everyone around you is perfectly happy going about their day as if all of this is, in fact, normal.


From a psychological perspective, this isn’t a very strange phenomenon either. There is such a thing as the social hierarchy, which came to us from evolution: being on the bottom of the hierarchy is bad. It could spell out death. These days, with the wrong crowd, it can mean social death. So what do we do? We look around us, see what others are doing, and then emulate. This doesn’t work always; with people who have a strong sense of self or are very aware of the context (e.g. have lived in Sydney their whole lives) won’t be as prone to this. But I’m new to Sydney, and new to having a higher income now that I no longer live of the PhD “wage”. As a result, I’m actually very susceptible to my surroundings. And my surroundings are telling me to go to buy labels. The only thing stopping me from spending it all, and then some, is that this wouldn’t be in line with my financial plan. I’m not exactly a proponent of FIRE, but going a month without saving any money makes me quite anxious. It’s a very Dutch thing I think. And there culture strikes again: I want to blend in with the Sydney-ers, but economically, I’m to Dutch to do it (I’m also constrained by my income, I’m not a Russian Oligarch or Asian Tycoon). But the idea of living within your means, saving for later and not blowing your money in general is also a cultural thing. This rather prudent way of thinking is also largely culturally determined.


For those who live, or have lived, predominantly in consumption focused cultures, I cannot imagine the longer-term impact this much have on both self-esteem and perceptions of wealth and priorities. Very often, in societies like this, consumer debt is much higher, as people try to keep up with what is perceived as either the standard or the ideal. This type of hyper consumerism is nothing but a debt trap killing both your psyche and the environment. I previously wrote an article on lifestyle inflation: you consume to your income and the income of the positions you want to be in, rather than your own true preferences. This links quite nicely to conspicuous consumption of this kind. There’s a lot of overlap between the two.


So what can we do? Well, I know I need to hang out more in the west of Sydney, where people are more normal and seem to have more going on in their life than being spotted whilst fully decked out in labels (why?!). If you or your values don’t fit your surroundings, change the surroundings. And in line with the aforementioned article on lifestyle inflation: you need to figure out what it is you really want, from life, from yourself and from your finances. I have to admit, the first thing I got myself with my first paycheck was a bag from Kurt Geiger, but I bought it as a commemoration of my first non-PhD paycheck. I also already know what I’m getting myself for my 27th birthday (a pair of Valentino rock studs) but that’s because I’ve wanted them for a long time. And, more importantly so, I’m not getting into debt to buy either of these things. And that matters. A lot. That’s the thing no one tells you about conspicuous consumption: where is the money coming from to pay for all of it? Sometimes it’s wealthy parents, sometimes the people are wealthy in their own right (a tad more impressive, if you ask me), or sometimes it’s mountains of debt. And no purse is worth taking on debt. Not. A. Single. One. Also, can we please stop pretending that Louis Vuitton checked purses and any Michael Kors purse looks nice. They’re ugly. Thanks.

Behavioural Science