DT 12/22 - See it to believe it. Experimental evidence on status good consumption among the youth

We ran a field experiment in which 20-year-olds choose between a socially visible and a non-socially visible good after a friend randomly received one of these goods or an unknown good. We find no differences in choices when the friend received the non-socially visible good instead of the unknown one. However, we find differences when the friend received the socially visible good instead of the other two. Consistent with a status-consumption interpretation, the sign of those differences depends on the socioeconomic position of the decision maker compared to her friend. Those in a disadvantaged position consume more and those in an advantaged position consume less of the socially-visible good when their friend received that good instead of the other two. We further find that treatment effects vary by gender in a way that reinforces the status consumption interpretation of our results. Boys experience a worse subjective social position and consume more of the socially visible good after a friend received that good. On the contrary, girls improve their subjective position when a friend received the socially visible good, and this offsets any effect on their consumption decision.