Conspicuous Consumption: Why We Go Broke Trying to Look Rich

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In 1899, as railroad tycoons and steel magnates crowded into rooms once reserved for old money, Thorstein Veblen published The Theory of the Leisure Class and gave the spectacle a name: conspicuous consumption. The new rich had no lineage to display, so they displayed waste, in money and in time. Like a peacock's tail, the cost and impracticality were the whole message. This episode starts there and follows the habit downhill, through Paul Nystrom's pecuniary emulation in the 1920s and James Duesenberry's 1949 bandwagon and demonstration effects, to a middle class pegging its spending to the neighbors.

The modern evidence is everywhere: McMansions that swallow yards and retirement funds, off-road SUVs idling in suburban traffic, loud logos giving way to quiet luxury. The conversation then turns to the cost, including debt taken on to imitate the wealthy and savings drained into status goods, and to the remedies economists have proposed, from luxury taxes to a progressive consumption tax.

• The 1996 book The Millionaire Next Door by Thomas J. Stanley and William D. Danko found many real millionaires practice conspicuous frugality, such as paying cash for a five-year-old used car.
• A 2013 survey of more than a thousand Americans found men scored higher on overt materialism, women on impulse purchases, and both were equally prone to brand loyalty.
• Robert H. Frank's expenditure cascade describes spending norms set at the top rolling down every rung of the income ladder, often paid for with credit.
• Dick Meyer's 2006 idea of aggressive ostentation reads the loudest purchases as an angry demand to be noticed in an anonymous society.
• John Stuart Mill argued that goods bought purely for their costliness are ideal to tax, since a higher price does not spoil them for the buyer.