Moving Away from the Joneses to Move Ahead : Migration, Information Gap and Signalling

Signalling social status through visible goods consumption is often perceived as a way in which individuals seek to emulate or move up within the community. This paper assesses the impact of transnational migration on status goods consumption in the Indian state of Kerala. We utilize the plausibly exogenous variation in migration networks in the neighbourhood and religious communities to account for the potential endogeniety. The findings indicate a positive effect of migration on conspicuous consumption, even after controlling for household income. A potential channel that we propose is information gap among permanent residents about the income levels of an out-migrant, which is leveraged by them to signal higher status in society. We explore this possibility using a theoretical model to connect migration, information gap and status good consumption and derive the conditions to test whether migrants exhibit snobbish or conformist behaviour. Empirical findings indicate an overwhelming predominance of snobbish behaviour