To Be or not to Be like the Joneses : Effects of 'Income Transparency' on Consumption Attitude and Behavior among Low–Income Consumers

Human beings have a fundamental desire to seek social and economic status. Individual income is an essential determinant of economic status, but income information is typically private. As a result, people often strategically consume certain goods and services to signal their income and the concomitant economic status to others. This research investigates how the emerging practice of income transparency affects consumers’, especially lower-income individuals’, judgment and decision to seek status from what they consume. Drawing insights from multiple approaches – viz., a primary survey of private and public-sector employees, analyzing revealed market data, and conducting seven experiments (N = 2541; 3 preregistered), we find that consumers facing income transparency versus income privacy show a systematically lower preference for conspicuous economic status consumption. This differential effect is mediated by a reduced perception of “Spending Implies Income.” The research also identifies several individual and situational factors – viz., status-seeking motivation, multiple income sources, variability in earned income potential – that moderate when and for whom the observed differential effect is most likely to occur. The findings make a case for the positive impact of a workplace-related policy in nudging consumers towards less economic status-enhancing consumption, resulting in potentially more personal savings among lower-income consumers