A Study on Demand for Visible Good: Status Signaling through Children’s Clothing(CEIBS Working Paper, No. 030/2020/MKT, 2020)

Conspicuous consumption, first defined by Veblen (1899), describes wealthy people spending excessively on goods to signal their superior social status to the public. Today, this behavior is no longer exclusive to the rich. Average people can also acquire branded products with the intention of being perceived as being a member of a certain class or having desirable individual qualities. Casual observation suggests that this phenomenon has been extended to children, who can often be seen using status branded products. One notable example is parental spending on conspicuous children’s apparel. We ascertained the theoretical arguments found in the literature and used secondary data on children’s apparel purchases to validate the motives and predictions implied by the literatures in consumer behavior and economics. Our main contribution is to bridge the gap between consumer behavior and economics where the former relied on classroom experimental data while the latter used cross-sectional expenditure diary data. There are no studies using actual transactional data to investigate the demand for visible good consumptions. Furthermore, we look into the effect of visual intensity on the demand of visible goods. With these findings, we offers guidance for children’s clothing companies to adjust their product lines and possible for CSR initiatives.