BEHAVIORAL SCIENCES WORKSHOP
Abstract: This paper provides the first field-experimental evidence of the existence of status goods. We work with an Indonesian bank that markets widely-recognized platinum credit cards to high-income customers. In the first experiment, we show that demand for the platinum card is substantially higher than demand for its tangible benefits and services. Transaction data reveal that platinum cardholders are more likely to use the card in social contexts where others may notice it, implying social image concerns. We next provide experimental evidence of positional externalities from the consumption of these status goods. Finally, we show that higher self-esteem causally reduces demand for status goods, suggesting that self and social image are substitutes.
Gautam Rao is an Assistant Professor at the Department of Economics at Harvard. Gautam received his Ph.D. in Economics from UC Berkeley in 2014, and spent a year as a post-doc at Microsoft Research before moving to Harvard. Gautam’s research brings insights from psychology to bear on topics in economics, particularly topics relevant to developing countries.