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Household Consumption and the Discrepancy Between Economic and Subjective Poverty: The Mediating Roles of Perceived Social Status and Social Connectedness

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Abstract

This study examines the influence of conspicuous and experiential consumption on the discrepancy between economic and subjective poverty as well as the potential mechanisms for any such discrepancy. Conspicuous consumption describes the purchase of goods to display social status and economic power, while experiential consumption describes purchases made primarily to acquire a life experience. Cross-sectional data were drawn from the first wave (2015) of the Hong Kong Panel Survey for Poverty Alleviation (n = 1752). Ten consumption categories (food, utilities, necessities, rent, mortgage, communication, transportation, education, health, and leisure) were classified as either conspicuous (experiential) or non-conspicuous (non-experiential) consumption. Logistic regression showed that expenditure on leisure, which falls into both conspicuous and experiential consumption, increased the probability of feeling non-poor among the economically poor and, conversely, reduced the probability of feeling poor among the economically non-poor. Multiple mediation analysis further revealed that these relationships were mediated by self-perceived social status (conspicuous consumption pathway) but not by social connectedness (experiential consumption pathway). The findings confirm that the way people spend their money shapes their perceptions of poverty, which may deviate from their poverty status as measured by economic criteria. By enhancing self-perceived social status, conspicuous consumption reduces subjective poverty for both the economically poor and the non-poor.

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Notes

  1. Household income was the post-transfer income that included the household members’ employment earnings, investment return, government and non-government cash transfers.

  2. In 2015, the poverty line was HKD3,800 for 1-person households, HKD8,800 for 2-person households, HKD14,000 for 3-person households, HKD17,600 for 4-person households, HKD18,200 for 5-person households and HKD19,500 for 6-person households.

  3. I experimented with lower (0.45) and higher (0.55) cut-off values. The two types of consumption found to be significantly associated with subjective poverty—leisure (conspicuous) and necessities (non-conspicuous)—remain in the same category regardless of the choice of cut-off value. Therefore, the findings are not sensitive to the choice of cut-off value.

  4. I tried another proxy—acquittance with neighbours (“how many do you know among your neighbours” (1(none of them) to 4 (most of them))—to measure social connectedness. The results did not deviate from the main analysis: the associations between leisure expenditure and subjective poverty were mediated by self-perceived social status but not social connectedness.

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Acknowledgement

The research was supported by Chief Executive’s Community Project List (Grant No. 2013/CP03). The author would like to thank Dr. Law Yik Wa, Frances, Prof. Yip Siu Fai, Paul and 2019 Research Output Prize of the University of Hong Kong.

Funding

This work was supported by Chief Executive’s Community Project List (Grant No. 2013/CP03).

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Authors and Affiliations

  1. Department of Social Work and Social Administration, The University of Hong Kong, Hong Kong SAR, China

    Chenhong Peng

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Appendix I: Visibility Indices (Heffetz, 2011)

Appendix I: Visibility Indices (Heffetz, 2011)

Category

Index

Food out

0.62

Food home

0.51

Utility

0.31

Rent, or mortgage, or purchase, of their housing

0.50

Communication (cell phone)

0.47

Transportation

0.45

Education

0.56

Health

0.36

Leisure (computers, games, TVs, video, audio, musical and sports equipment, tapes, CDs)

0.66

Leisure (cable TV, pets and veterinarians, sports, country clubs, movies, and concerts)

0.58

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Peng, C. Household Consumption and the Discrepancy Between Economic and Subjective Poverty: The Mediating Roles of Perceived Social Status and Social Connectedness. J Happiness Stud 24, 1703–1727 (2023). https://doi.org/10.1007/s10902-023-00649-z

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