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Income Inequality Inspires Interest in Luxury Items

A state-by-state analysis of Google searches find high-status goods are of more interest in places with a larger gap between rich and poor.
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(Photo: Karramba Production/Shutterstock)

(Photo: Karramba Production/Shutterstock)

As the gulf between the wealthy and the rest of us widens, are you concerned that your social status is slipping away? When your businessman brother-in-law drops by while taking his Porsche out for a spin, do you feel the need to somehow signal that you’re not doing so badly yourself—even if, in fact, you are falling further and further behind?

That rather dangerous dynamic was demonstrated last year in a Federal Board of Reserve working paper. It found a link between lower household income, relative to one’s neighbors, and the purchase of “high-status cars,” along with riskier portfolios and higher levels of debt.

In a newly published study, University of Warwick psychologists Lukasz Walasek and Gordon D.A. Brown find additional evidence of the appeal of bling to the left-behind. They did so using a research tool most of us will find extremely familiar: Google searches.

“We found that, of the 40 search terms used more frequently in states with greater income equality, more than 70 percent were classified as referring to status goods (such as designer brands, expensive jewelry, and luxury clothing),” they report in the journal Psychological Science.

While the researchers have no way of knowing how many of these fur vests and designer rain boots were actually purchased, their results suggest a larger rich-poor gap prompts people to spend “cognitive resources and time” searching for ways to keep up the appearance of affluence.

This effort is “at the likely expense of alternatives that may be more conducive to the health and well-being of self and society,” they add.

Walasek and Brown began by obtaining five-year estimates of income inequality for each United States state. After adjusting the figures to factor in such issues as household income, total population, and percentage of foreign-born residents, they looked at how the use of various search terms varied by state to state.

“The majority of search terms that were positively associated with our measure of income inequality refer to positional goods,” they write. “The search terms included luxury brands ('Ralph Lauren,' 'David Yurman jewelry') and material possessions such as furniture, jewelry, and shoes. Search terms that were negatively correlated with income inequality, in contrast, include terms clearly unrelated to status goods (such as 'chicken bake,' 'lemon bars recipe' and 'chick flick movies').”

Of course, some of those pricey items are presumably being searched for by the rising number of rich people in the unequal states. And it’s at least possible that the best recipe for lemon bars can bestow a certain amount of status on an amateur baker, at least in some circles.

Nevertheless, it’s interesting to learn that, of the 40 search terms used more frequently in states with less income equality, not one referred to high-status goods. Clearly, there is significantly more interest in such items in states where the rich are getting richer, and the rest of the population feels real or imagined pressure to match their level of conspicuous consumption.

So as income inequality increases, you might want to invest in high-end blazers and penny loafers.

Or, perhaps, pawn shops.

Findings is a daily column by Pacific Standard staff writer Tom Jacobs, who scours the psychological-research journals to discover new insights into human behavior, ranging from the origins of our political beliefs to the cultivation of creativity.