Interplay of Status Perception, Visible Inequality, Conspicuous Consumption, and Food Expenditure: Evidence from Consumer Pyramid Household Survey of Indian Households*

Abstract

This study delves into the intricate interplay between visible inequality, conspicuous consumption, and food consumption in Indian households. Leveraging data from the Consumer Pyramids Household Survey (CPHS) provides significant insights. Through empirical analyses, including panel data analysis and instrumental variable panel data analysis, this study supports the hypothesis that there exists a relationship between visible inequality and conspicuous consumption among Indian households. The positive coefficients linked to conspicuous consumption variability reinforce established theories concerning the impact of status perception on spending behaviour. This study reveals a noteworthy adverse effect of visible inequality on essential expenditures, particularly food consumption, highlighting the delicate balancing act that households navigate between status‐driven spending and meeting fundamental needs. By employing instrumental variable regression models to address endogeneity concerns, this study robustly confirms the relationship between visible inequality and conspicuous consumption. This study emphasises the nuanced relationship between status‐oriented spending, visible inequality, and essential expenses in Indian households.