’Keeping up with the Joneses’

The inequality gap is increasing and so is conspicuous consumption - By Wendy Philpott University Relations - Our very human tendency to want to "keep up with the Joneses" is as apparent today as ever. In fact, research shows that over the past decade, conspicuous consumption has intensified in developed economies. While the impacts of economic inequality are complex, a negative social impact identified by a Waterloo graduate student is that it encourages consumer habits such as buying expensive clothing, cars, or personalized services at the expense of both essential consumption and savings. Iuliia Nesterova, a PhD candidate in economics, has found that higher inequality is associated with more conspicuous consumption. Her research shows that people across income groups are spending more money on non-essential goods and especially services, regardless of their financial resources. In her dissertation, Nesterova explores how consumer choices spurred by social comparisons - "keeping up with the Joneses" - encourages conspicuous consumption, which leads to excess borrowing and insufficient saving. Her research suggests that mitigating inequality can lower conspicuous consumption and consequently benefit everyone.