Editing Conspicuous consumption (section)

== Solutions ==
In the case of conspicuous consumption, [[Luxury tax|taxes upon luxury goods]] diminish societal expenditures on high-status goods, by rendering them more expensive than non-positional goods. In this sense, luxury taxes can be seen as a [[Pigouvian tax]] correcting [[market failure]]—with an apparent negative [[deadweight loss]], these taxes are a more efficient mechanism for increasing revenue than 'distorting' labour or capital taxes.<ref>{{cite journal|last=Ng|first=Yew-Kwang|year=1987|title=Diamonds Are a Government's Best Friend: Burden-Free Taxes on Goods Valued for Their Values|journal=[[American Economic Review]]|volume=77|issue=1|pages=186–191|jstor=1806737}}</ref> A [[luxury tax]] applied to goods and services for conspicuous consumption is a type of progressive [[sales tax]] that at least partially corrects the negative [[externality]] associated with the conspicuous consumption of [[positional good]]s.<ref>{{cite journal |first=Daniel |last=Sámano |title=Optimal Linear Taxation of Positional Goods |journal=Working Paper |location=University of Minnesota |year=2009 |url=http://dsamano.weebly.com/uploads/1/2/8/7/1287492/draftlux05.pdf }}</ref> In ''Utility from Accumulation'' (2009), Louis Kaplow said that assets exercise an objective social-utility function, i.e. the rich man and the rich woman hoard material assets, because the hoard, itself, functions as status goods that establish his and her socio-economic position within society.<ref>{{Cite journal|doi=10.3386/w15595|title=Utility from Accumulation|year=2009|last1=Kaplow|first1=L.|doi-access=free}}</ref> When utility is derived directly from accumulation of assets, this lowers the dead weight loss associated with inheritance taxes and raises the optimal rate of inheritance taxation.<ref>{{Cite journal | doi = 10.1093/cesifo/ifr014| title = The Tax Treatment of Intergenerational Wealth Transfers| journal = CESifo Economic Studies| volume = 57| issue = 2| pages = 365–401| year = 2011| last1 = Cremer | first1 = H.| last2 = Pestieau | first2 = P.| url = https://orbi.uliege.be/bitstream/2268/118992/1/cesifo.ifr014.full.pdf}}</ref>

[[File:John Stuart Mill by John Watkins, 1865.jpg|thumb|right|300px|In the 19th century, the philosopher John Stuart Mill recommended [[Luxury tax|taxing]] the practice of conspicuous consumption.]]

In place of luxury taxes, economist [[Robert H. Frank]] proposed the application of a progressive consumption tax; in a 1998 ''[[The New York Times|New York Times]]'' article, [[John Tierney (journalist)|John Tierney]] said that as a remedy for the social and psychological malaise that is conspicuous consumption, the personal [[income tax]] should be replaced with a [[progressive tax]] upon the yearly sum of [[discretionary income]] spent on the conspicuous consumption of goods and services.<ref name="The Big City">{{cite news |last=Tierney |first=John |url=https://www.nytimes.com/1998/11/30/nyregion/the-big-city-rich-and-poor-consumed-by-consuming.html |title=The Big City; Rich and Poor, Consumed By Consuming |newspaper=The New York Times|date=1998-11-30|access-date=2011-10-20}}</ref> Another option is the [[redistribution of wealth]], either by means of an [[incomes policy]] – for example the conscious efforts to promote [[wage compression]] under variants of [[social corporatism]] such as the [[Rehn–Meidner model]] and/or by some mix of progressive taxation and transfer policies, and provision of public goods. When individuals are concerned with their relative income or consumption in comparison to their peers, the optimal degree of public good provision and of progression of the tax system is raised.<ref>{{cite journal |first=L. |last=Micheletto |title=Optimal Nonlinear Redistributive Taxation and Public Good Provision in an Economy with Veblen Effects |journal=Journal of Public Economic Theory |volume=13 |issue=1 |year=2011 |pages=71–96 |doi=10.1111/j.1467-9779.2010.01493.x |url=http://uu.diva-portal.org/smash/get/diva2:211325/FULLTEXT01 |doi-access=free }}</ref><ref>{{cite journal |first1=Michael J. |last1=Boskin |first2=Eytan |last2=Sheshinski |title=Optimal Redistributive Taxation When Individual Welfare Depends Upon Relative Income |journal=[[Quarterly Journal of Economics]] |volume=92 |issue=4 |year=1978 |pages=589–601 |jstor=1883177 |doi=10.2307/1883177}}</ref><ref>{{cite journal |first1=Thomas |last1=Aronsson |first2=Olof |last2=Johansson-Stenman |title=When the Joneses' Consumption Hurts: Optimal Public Good Provision and Nonlinear Income Taxation |journal=[[Journal of Public Economics]] |volume=92 |issue=5–6 |year=2008 |pages=986–997 |doi=10.1016/j.jpubeco.2007.12.007 }}</ref> Because the activity of conspicuous consumption, itself, is a form of [[superior good]], diminishing the [[income inequality]] of the [[income distribution]] by way of an [[egalitarian]] policy reduces the conspicuous consumption of positional goods and services. In ''Wealth and Welfare'' (1912), the economist [[A. C. Pigou]] said that the redistribution of wealth might lead to great gains in [[Social welfare function|social welfare]]:

{{Quotation| Now the part played by comparative, as distinguished from absolute, income is likely to be small for incomes that only suffice to provide the necessaries and primary comforts of life, but to be large with large incomes. In other words, a larger proportion of the satisfaction yielded by the incomes of rich people comes from their relative, rather than from their absolute, amount. This part of it will not be destroyed if the incomes of all rich people are diminished together. The loss of economic welfare suffered by the rich when command over resources is transferred from them to the poor will, therefore, be substantially smaller relatively to the gain of economic welfare to the poor than a consideration of the law of diminishing utility taken by itself suggests.<ref>{{cite book |first=Arthur Cecil |last=Pigou |title=Wealth and Welfare |url=https://archive.org/details/in.ernet.dli.2015.187653 |year=1912 }}</ref>}}

The economic case for the taxation of positional, luxury goods has a long history; in the mid-19th century, in ''[[Principles of Political Economy]] with some of their Applications to Social Philosophy'' (1848), [[John Stuart Mill]] said:

{{Quotation|I disclaim all asceticism, and by no means wish to see discouraged, either by law or opinion, any indulgence which is sought from a genuine inclination for, any enjoyment of, the thing itself; but a great portion of the expenses of the higher and middle classes in most countries&nbsp;... is not incurred for the sake of the pleasure afforded by the things on which the money is spent, but from regard to opinion, and an idea that certain expenses are expected from them, as an appendage of station; and I cannot but think that expenditure of this sort is a most desirable subject of taxation. If taxation discourages it, some good is done, and if not, no harm; for in so far as taxes are levied on things which are desired and possessed from motives of this description, nobody is the worse for them. When a thing is bought not for its use but for its costliness, cheapness is no recommendation.<ref>John Stuart Mill, ''Principles of Political Economy with some of their Applications to Social Philosophy'', book 5, ch. 6, pt. 7 (W. J. Ashley, ed., Longmans, Green & Co. 1909) (1848)</ref>}}

In the case where conspicuous consumption mediates a link between inequality and unsustainable borrowing, one suggested policy response is tighter financial regulation.<ref>Joshua Aizenman, Menzie D. Chinn, and Hiro Ito, "Financial Spillovers and Macroprudential Policies", Working Paper (National Bureau of Economic Research, December 2017), https://doi.org/10.3386/w24105 </ref><ref>Joseph E Stiglitz, "New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part IV: Land and Credit", Working Paper (National Bureau of Economic Research, May 2015), https://doi.org/10.3386/w21192.</ref>

"Conspicuous non-consumption" is a phrase used to describe a conscious choice to opt out of consumption with the intention of sending deliberate social signals.<ref>{{cite journal |last1=Sørensen |first1=Elin Brandi |last2=Hjalager |first2=Anne-Mette |title=Conspicuous non-consumption in tourism: Non-innovation or the innovation of nothing? |journal=Tourist Studies |date=19 December 2019 |volume=20 |issue=2 |pages=222–247 |doi=10.1177/1468797619894463|s2cid=213042469 |url=https://findresearcher.sdu.dk:8443/ws/files/170914232/Brandi_S_rensen_and_Hjalager._Conspicuous_Non_consumption_in_Tourism._Tourism_Studies._2020.pdf }}</ref><ref>{{cite journal |last1=Portwood-Stacer |first1=Laura |title=Media refusal and conspicuous non-consumption: The performative and political dimensions of Facebook abstention |journal=New Media & Society |date=5 December 2012 |volume=15 |issue=7 |pages=1041–1057 |doi=10.1177/1461444812465139|s2cid=40206877 }}</ref>