Is there InConspicuous Consumption?

I have alot below on Conspicuous Consumption. But what if rich people spend their money and they don't want to be seen doing it? I also wonder what share of spending by the rich is on Conspicuous Consumption and what share is on  InConspicuous Consumption. A google search shows that there is research on InConspicuous Consumption. Maybe I will post some of those links tomorrow.

See The Ultrarich Are Spending a Fortune to Live in Extreme Privacy: In Miami and elsewhere, the wealthy are moving in increasingly private spheres, shelling out big money to bypass the indignities of public life by Arian Campo-Flores of The WSJ. Excerpts:

"The ultrawealthy are wielding their growing fortunes to glide through a rarefied realm unencumbered by the inconveniences of ordinary life. They don’t wait in lines. They don’t jostle with airport crowds or idle unnecessarily in traffic."

"A new service economy enables them to avoid everybody else if they want to. In the Bentley Residences condo tower under construction in Sunny Isles Beach, north of Miami, car elevators will deliver residents straight up to their homes and deposit vehicles in adjoining “sky garages,” avoiding the need to deal with parking valets and reception areas."

"Those who can afford it sometimes rent an entire facility to have exclusive use of it. At Centner Wellness, a high-end holistic healing center in Miami that offers a host of treatments employing the latest technology, rich clients occasionally book the whole place for several days, said founder Leila Centner.

One family of about 10 people did that a few months ago, she said, turning the 15,000-square-foot center into their own wellness playground, at a cost of $150,000."

"When the ultrawealthy choose to socialize, they often seek circles that are meticulously selected, said Gregory Pool, a managing director with NewEdge Wealth in Miami.

Faena Rose is a private social club in Miami Beach focused on art and culture, whose members are vetted by a committee and pay $15,000 initially and another $15,000 annually. They get VIP access to the beach club, spa and other amenities at the Faena Miami Beach hotel, and admission to roughly 80 cultural events a year, held in intimate settings for members only."

"A newer variant: private dinner clubs, where members get haute cuisine, personalized service and the ability to secure a table whenever they want."

"Lauren Beall, owner of Travel Couture in Miami Beach, specializes in arranging custom travel experiences for the ultrawealthy. She has booked private islands for clients and flown in Michelin-starred chefs, yoga instructors and performers."

Also see Veblen Goods by Andrew Loo of CFI (Corporate Finance Institute) . Excerpts:

"Veblen good is a type of luxury good named after American economist Thorstein Veblen. It shows a positive relationship between price and demand [it should say quantity demanded-CM], and thus an upward-sloping demand curve.

The demand [it should say quantity demanded-CM] for a Veblen good rises (drops) when its price increases (decreases). A Veblen good generally is considered a high-quality exclusive product and a status symbol. When the price goes higher, its status symbol makes the Veblen good more desirable to consumers with high social and economic standing. Some common examples of Veblen goods include luxury cars, wines, handbags, fine jewelry and watches and even sneakers."

"Conspicuous consumption is another relevant concept of Veblen goods. It represents the purchase of goods and services to display one’s economic power and social status, motivated by the desire for prestige.

The concept of conspicuous consumption was also identified by Thorstein Veblen in his book The Theory of the Leisure Class (1899). In the practices of conspicuous consumption, a higher price makes a product more desirable for its status symbol, which explains the features of Veblen goods from a sociological perspective."

Adam Smith may have beaten Veblen to the punch. In The Wealth of Nations, he wrote:

"With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eyes is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves. In their eyes the merit of an object which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or by the great labour which it requires to collect any considerable quantity of it, a labour which nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher price than things much more beautiful and useful, but more common." (the entire book is online)

In Veblen's chapter on "Conspicuous Consumption," there is no mention of Adam Smith. 

There is statistical or empircal evidence that supports Veblen's theory. A Ph. D. student found that rich families do spend more on "Conspicuous Consumption." 

See also Doctoral Thesis Says Rich People Spend More on Conspicuous Things. Excerpts:

"Ori Heffetz, a doctoral student in economics at Princeton University (back in 2005-now he is a professor at Cornell University), has developed the first broad-gauged index of product visibility. Sure enough, he finds in his thesis that conspicuous items make up a greater share of the consumption budget in wealthier families."

"Mr. Heffetz estimated the relationship between the amount spent on each of 29 products and a household's income, using data on 3,924 households from the 1997 Consumer Expenditure Survey, conducted by the Bureau of Labor Statistics. The "income elasticity of demand," defined as the percentage change in consumption for a 1 percent increase in income, summarizes the degree to which a good is a luxury or a necessity. A good is a luxury if a 1 percent increase in income is associated with more than a 1 percent increase in consumption of that good.

Mr. Heffetz's analysis indicates that the higher the visibility of a good, the more likely it is to be a luxury item. For example, spending on cars and jewelry, two highly visible items, rises as a share of a household's budget as its income rises, while spending on home utilities, an inconspicuous category, falls as a share of the budget as income rises."

Related posts:

What if you had to spend alot of money just to be offered the chance buy a luxury item? (2025) 

Has Luxury Lost Its Shine? Customers are complaining that they are getting less bang for their buck at the luxury store (a case of Veblen goods) (2024)  

Is Starbucks coffee no longer a Veblen good? (2024)

China's Government Cracks Down On Displays Of Wealth On Social Media (2022)  

(See In China, Bragging About Your Wealth Can Get You Censored: Online posts by users showing off their receipts, over-ordering food or scattering money have been deemed vulgar. Regulators say such content leads young people astray by Vivian Wang and Joy Dong of The New York Times.)

Payless sold its discount shoes for $600 a pair at mock luxury influencer event (2018)

Federal Reserve Economists May Have Discovered Another Cause Of Bankruptcy (if a neighbor wins the lottery people start spending more on consumption to keep up) (2016)

Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)