Keeping up with the Joneses: Thoughts About Income Inequality, Status Competition and Psychological Ownership

Like many of the members of this blog, I am interested in theories that attempt to capture the cognitive and affective components of psychological ownership. I believe that an important avenue for future research is investigation of the role of our possessions in the dynamically evolving socio-economic context. I would therefore like to use this opportunity to highlight a potentially interesting new angle in studying the role our belongings play in our lives. A growing body of empirical evidence shows that there is a strong negative relationship between income inequality and various indices of societal well-being. Income inequality is seen in distributions of income if a large proportion of income is received by a small percentage of the population, leading in turn to even greater wealth inequalities. For example, in a highly unequal country such as USA, the wealthiest 1% possess approximately 40% of all the wealth. Contrary to the predictions of economists, the money does not flow from the richest to the poorest, and income inequality worsens with time. Why is this an important issue? A great deal of evidence now shows that when large gaps in income and wealth exist between the richest and the poorest, society suffers from a range of socio-economic maladies. Income inequality is positively associated with the number of teenage pregnancies, homicides, imprisonment rates and obesity. At the same time, it is negatively correlated with social mobility and general level of trust in a society. For a great review I would recommend an excellent book by Wilkinson and Pickett (2009 – reference at the bottom).

In my research, I have been particularly interested in the psychological mechanisms that may explain the impact of inequality. One account is based on status-seeking tendencies. Some theories, such as the social rank hypothesis (Brown, G. D. A., Boyce, C. J., & Wood, 2014; Walasek & Brown, 2015), argue that when income distribution is more unequal, income becomes a better signal of our social status. What follows is that inequality will promote positional consumption, whereby people spend more time and effort to seek high-status goods. In order to “keep up with the Joneses” people become more materialistic, surrounding themselves with fancy cars (Bricker et al., 2014), bigger houses (Cynamon & Fazzari, 2013), luxurious brands (Chao & Schor, 1996). In fact, evidence from economics shows that in order to afford these goods, people work longer hours (Bowles & Park, 2005). Nonetheless, they are still more likely to take on debt (Perugini, Jens, & Collie, 2015) or declare bankruptcy (Alvarez-Cuadrado & Attar, 2012). According to the social rank hypothesis, focus on status consumption takes away from other important aspects of life, such as efforts to promote a healthy social relationships or looking after one’s own health. In one of our recent studies, together with Gordon Brown (2015), we have shown that when income inequality is high, people search Google for luxury brands and products, such as Prada, Gucci, Chanel, fur vests, jewellery etc. Thus, when distribution of income in a society is unequal, people become more interested in status competition, which is reflected in their interest in positional goods.

How this is all related to psychological ownership? As income inequality becomes recognized as a serious challenge to the well-being in our society, the role our possessions play in our lives may be changing. Many theories of psychological ownership maintain that belongings play an important role for our self-identity, satisfying many critical psychological needs (Pierce & Jussila, 2011). What happens when the utility of our belongings comes from the role they play in status competition? If we spend our money to show off our new watch or fur coat, are we unavoidably less attached to these goods? Or, perhaps, do we develop feelings of ownership towards objects while they allow us to signal our status, with these feelings dissipating when we realize that the good is owned by everyone else? Since these goods are quickly dispensable, being replaced by newer and swankier models and brands, it seems that there is little space for psychological ownership to develop. I should note that this issue is not just related to materialistic consumption but to positional consumption. For the former, owning material goods presents value in itself. For the latter, utility from owning a good comes from the fact that few others own such possession.

These and many other questions make me wonder about the ever-changing meaning of ownership in our society. It reminds me of an excellent talk by Russell Belk at the Vienna Ownership Workshop, who presented compelling evidence that the sense of owning changes (if not depreciates) with the growing popularity of shared goods and services (Belk, 2010). I think that more work needs to be done in order to explore how the concept of psychological ownership changes along with the values in a society that are determined by the socio-economic circumstances.

Perhaps this research has been already done and I am just not aware of it. Just let me know if this is the case.

Editor’s note:

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