Workplace inequality is associated with status-signaling expenditure

Abstract

Regional inequality is known to magnify sensitivity to social rank. This, in turn, is shown to increase people’s propensity to acquire luxury goods as a means to elevate their perceived social status. Yet existing research has focused on broad, aggregated datasets, and little is known about how individual-level measures of income interact with inequality within peer groups to affect status signaling. Using detailed financial transaction data, we construct 32,008 workplace peer groups and explore the longitudinal spending and salary data associated with 683,677 individuals. These data reveal links between people’s status spending, their absolute salary, salary rank within their workplace peer group, and the inequality of their workplace salary distribution. Status-signaling luxury spending is found to be greatest among those who have higher salaries, whose workplaces exhibit higher inequality, and who occupy a lower rank position within the workplace. We propose that low-rank individuals in unequal workplaces suffer status anxiety and, if they can afford it, spend to signal higher status.