Fooling the eye of the beholder: deceptive status signalling among the poor in developing countries

TLDR

Poor consumers in developing countries use status‑signalling devices that rely on deceiving observers, often by buying counterfeit versions of expensive brand‑name goods. The study analyzes the choice of deceptive conspicuous consumption within a product characteristics framework, comparing it to non‑deceptive alternatives. The analysis applies Lancaster’s product characteristics approach to assess how counterfeit goods balance status and functionality. The results show that counterfeit goods provide a more appropriate status‑functionality mix than originals and can enhance low‑income consumers’ welfare when observers are effectively deceived. © 2003 John Wiley & Sons, Ltd.

Abstract

Abstract Poor consumers in the developing world use a variety of status signalling devices that rely on deception of the observer. A frequently used deceptive strategy is the consumption of counterfeit instead of original status‐intensive goods, mainly cheap copies of expensive brand‐name goods from developed countries. The choice for such deceptive modes of conspicuous consumption is analysed within a product characteristics approach as developed by Lancaster and compared with non‐deceptive alternatives. Under the controversial assumption that the poor care about status, it is shown that counterfeit goods embody a more ‘appropriate’ combination of status and functionality than original goods. It appears that the consumption of counterfeits potentially enhances the welfare of low‐income consumers, depending on the extent to which the eye of the relevant beholder is effectively deceived. Copyright © 2003 John Wiley & Sons, Ltd.