Economic Inequality Increases the Preference for Status Consumption

Prior research has shown the relationship between objective economic inequality and searching for positional goods. It also investigated the relationship between social class and low income with conspicuous consumption. However, the causal relationship between economic inequality (the difference in wealth between individuals and groups living in a shared context and consumer behavior) has been less explored. Furthermore, there are also few studies looking for the psychological mechanisms that underlie these effects. The current research’s main goal is to analyze the consequences of perceived economic inequality (PEI) on conspicuous and status consumption and the possible psychological mechanisms that could explain its effects. Furthermore, the current research aims to examine whether there is a causal relationship between PEI and materialism preferences and attitudes toward indebtedness. This work includes two preregister experimental studies. In the Study 1 (n = 252), we manipulated PEI and its legitimacy through a 2 (high vs. low inequality) × 2 (Illegitimate vs. legitimate) between-participants experiment. Results showed a main effect of PEI on status consumption, status seeking, status anxiety, materialism, and attitude toward indebtedness. No interaction effect between legitimacy and inequality was found. In the Study 2 (n = 301), we manipulated the PEI through the Bimboola Paradigm. We replicated the effect of PEI on status consumption, status seeking, and materialism and found that status seeking mediated the relationship between PEI and status and conspicuous consumption. Economic inequality affects consumer behavior and favors consumption preferences for products that provide desirable symbolic values associated with status. These results could have important implications in the interpersonal and intergroup processes, including those related to consumption and purchase.

Determinants of Financial Capability: A Situational Analysis for Namibia

It is imperative that if the poor in society benefit from the massive developments in the financial sector, then such a sector must be genuinely inclusive. It should meet the needs of all citizens with the potential to use such financial services productively. This paper scopes financial inclusivity as a process ensuring ease of access, availability, and usage of financial services by all members of society. To reduce socio-economic inequality, the poor in developing countries, like everyone else, need access to a wide range of financial services that are convenient, flexible, and reasonably priced. Therefore, financial inclusivity is sought to be significant towards the global development agenda as a tool for increasing the poor’s access to financial services, often cited as a mechanism that can help reduce poverty and lower income inequality. For many years, microfinance has been heralded as a mechanism for enhancing financial inclusion. It provides an avenue through which the marginalized and the poor can access and benefit from the formal financial system. Moreover, financial inclusivity is substantially evident in the rural areas among the poor, who have no collateral or credit history for participating in the legal financial system. As a result, financial inclusion is receiving increased attention as an essential tool for reducing aspects of socio-economic inequality characterized by the isolation of individuals and communities from formal financial services, like affordable and accessible credit.