Why do young black men spend so much money on jewellery and flash motors? Is it for the same reason they like jerk chicken or RnB - that there are racial differences in tastes?
No. This new paper (pdf) from the NBER provides a different reason.
One fact disproves the taste theory - conspicuous consumption, relative to income, is much higher among white Alabamans than white Texans, even though the two are otherwise culturally similar.
Instead, what's happening is simply that conspicuous consumption - spending on jewellery, clothing and cars - is a means of signalling one's status, how one is doing relative to one's reference group.
But if one's reference group is really rich, it's difficult to send signals of one's success, as one loudmouth Texan in a London casino a few years ago found out.
"I'm worth a $100 million" he said.
"Really?" replied Kerry Packer. "I'll toss you for it."
So, signalling works better if one's reference group is poor - be the group white Alabamans or young urban blacks. Knowing this, young blacks, faced with a poorer reference group (each other) spend more on bling than richer whites.
In this respect, they know just what Rousseau knew 250 years ago - that wealth matters because it's a positional good:
If we have a few rich and powerful men on the pinnacle of fortune and grandeur, while the crowd grovels in want and obscurity, it is because the former prize what they enjoy only in so far as others are destitute of it; and because, without changing their condition, they would cease to be happy the moment the people ceased to be wretched (Discourse on the origin of inequality, part II).
"Is it for the same reason they like jerk chicken or RnB - that there are racial differences in tastes?"
I suspect you didn't mean what that actually says.
Posted by: Peter Risdon | September 21, 2007 at 02:51 PM
"jerk" and "toss" in the same post: are you trying to tell us something? Is it a cry for help?
Posted by: dearieme | September 21, 2007 at 04:21 PM
hence "playground bling".
Posted by: Dipper | September 21, 2007 at 07:09 PM
Your cry for help worked: you receive a plaudit in this morning's FT. Well done, that man.
Posted by: dearieme | September 22, 2007 at 11:10 AM
"The oilman walked away"
Well that is quite expensive for a handjob.
Posted by: EddyP | September 25, 2007 at 11:50 AM
You've given an economists translation of Festingers' social comparison theory, and added in the often overlooked point that that reference groups (and thus role models) must be of the same ethinic group to have referential power.
An inversion of this argument is that as ethnic minorities tend to be grouped with poorer whites they become locked into a culture of low aspiration and acheivment. Looking at the degree of cutural interpenentration - in terms of the way that black "gehtto" language, modes of dress, taste in music etc are influencing mainsteam white "chav" culture, I think this argument has some validity, and that differences in taste in food and music are culturally driven rather than a result of psysiological differences driven by inherited "racial memory", which is what you appeared to be suggesting.
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Posted by: soft cialis | March 31, 2010 at 08:35 PM
Fascinating, but at what point is what you wear part of your ethnic identity rather than your economic positioning?
In the UK this is a big deal because of the way we deal with discrimination at work and school.
What we wear to work and school is regulated, challenged and in the mix right now.
http://irenicon.wordpress.com/2011/06/28/too-hot-to-handle/
Posted by: Annabel Kaye | July 29, 2011 at 09:24 AM