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BACHELOR THESIS MARKETING
‘IS MORE ALWAYS BETTER?’
A research investigating the influence of the individualism/collectivism dimension on
subjective well-being achieved by conspicuous consumption.
ANR:
s263226
Name:
S.E.D. Peters
Subject:
Subjective Well-being,
Conspicuous Consumption,
Individualism/Collectivism
Subject Area:
Marketing
Study program:
International Business
Administration
Bachelor thesis
Supervisor:
B. Briers
Academic year:
2009-2010
Words:
7889
Sofie Peters (263226)
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Abstract
The thesis analyzes the characteristics of subjective well-being, conspicuous
consumption and the individualism/collectivism dimension. Following the analysis of the
characteristics, a hypothesis concerning the relations between the variables is made.
Subjective well-being is a measure of how people feel about their whole life or aspects of
their life. Personality and economic factors have a particularly strong influence on
subjective well-being.
Conspicuous consumption occurs if people are consuming goods and services in
order to impress other people. According to this idea, individuals emulate the
consumption patterns of individuals of higher classes in the social hierarchy. The
important difference between conspicuous and general consumption is the relative in
stead of the absolute level of consumption.
The state of happiness as the result of conspicuous consumption will disappear at
the moment when everyone has gained the same level of status. People will always try to
improve their situation to get happier. The vicious circle of fulfilling needs through
conspicuous consumption will start again. Subjective well-being through conspicuous
consumption is based on a short term rather than on a long-term view. In the long run
nobody will become happier of conspicuous consumption.
In most cases individualistic cultures provide higher incentives for economic
development, where people are less dependent of social obligation and can act more
autonomously. By choosing a career, friendships and the way of living individually,
people better meet their intrinsic needs and consequently increase subjective well-being.
Thus individualistic cultures on average tend to produce higher levels of subjective wellbeing, because they can make their own decisions toward their way of living, also
concerning the freedom of consumption. Based on the characteristics of conspicuous
consumption and on the characteristics of individualism versus collectivism, it can be
concluded that people get happier in individualistic cultures through conspicuous
consumption.
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Table of contents
Abstract ............................................................................................................................... 3
Table of contents................................................................................................................. 4
Chapter 1: Introduction ....................................................................................................... 6
§1.1
Problem background ........................................................................................... 6
§1.2
Problem statement............................................................................................... 8
§1.3
Research Questions............................................................................................. 8
§1.4
Academic relevance ............................................................................................ 9
§1.5
Managerial relevance .......................................................................................... 9
§1.6
Structure and graphical representation.............................................................. 10
Chapter 2: Well-being....................................................................................................... 11
§2.1
Introduction....................................................................................................... 11
§2.2
From Well-being to Subjective Well-being...................................................... 11
§2.3
Elements of Subjective Well-being .................................................................. 12
§2.4
Influencing factors of Subjective Well-being ................................................... 12
§2.5
Theories about Subjective Well-being.............................................................. 13
§2.5
Conclusion ........................................................................................................ 13
Chapter 3: Conspicuous Consumption.............................................................................. 15
§3.1
Introduction....................................................................................................... 15
§3.2
Start of research on Conspicuous Consumption ............................................... 15
§3.3
Comparisons in Conspicuous Consumption ..................................................... 16
§3.4
Motives of Conspicuous Consumption............................................................. 16
§3.6
Conclusion ........................................................................................................ 17
Chapter 4: Influence of Conspicuous Consumption on Subjective Well-being ............... 18
§4.1
Introduction....................................................................................................... 18
§4.2
Absolute Subjective Well-being combined with Consumption........................ 18
§4.3
Relative Subjective Well-being combined with Consumption......................... 19
§4.4
Influence of Conspicuous Consumption on Subjective Well-being ................. 20
§4.5
Conclusion ........................................................................................................ 21
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Chapter 5: Cultural dimension Individualism versus Collectivism .................................. 22
§5.1
Introduction....................................................................................................... 22
§5.2
Dimension individualism versus collectivism .................................................. 22
§5.3
Features Collectivism versus Individualism ..................................................... 23
§5.4 Linking Individualism versus Collectivism Dimension with Subjective Wellbeing 24
§5.5
Change to a more individualistic society.......................................................... 25
§5.6
Conclusion ........................................................................................................ 26
Chapter 6: Influence of Individualism versus Collectivism on Subjective Well-being with
Conspicuous Consumption ............................................................................................... 28
§6.1
Introduction....................................................................................................... 28
§6.2
Relationship between values............................................................................. 28
§6.3
Intrinsic versus extrinsic values ........................................................................ 29
§6.4
Conclusion ........................................................................................................ 30
Chapter 7: Conclusion, discussion, limitations and further research................................ 32
Reference list .................................................................................................................... 34
Appendix........................................................................................................................... 40
§1.6
Time schedule ................................................................................................... 40
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Chapter 1: Introduction
§1.1
Problem background
On the 3rd of April 2010 the sale of the new iPad started in the United States of
America. The iPad developed by Apple Inc. is a tablet computer which is positioned
between a smartphone and a laptop computer. Hundreds of people were queuing in line in
front of the shops before opening time to get this new gadget. Before the iPad arrived on
the 3rd of April, a diamond importer had already announced a version of the iPad with
diamonds of 11.43 carats that will cost $20.000.1 You can ask yourself why people would
buy a glorified netbook for $20.000 if you also can purchase a regular phone and regular
computer with similar functions that were available much earlier. It appears that for some
people, it is not enough to satisfy their primary needs like a home, food and water.
One of the reasons why people buy luxury goods is to show their status (Veblen, 1899).
Already in the middle ages forms of status showing were present. There were laws
describing in detail what each social class was permitted and forbidden to wear. Next to
that, the law determined the maximum price of the clothing (Berry & Christoper, 1994).
For example, differences existed between clothes for grooms and knights (Berry &
Christoper, 1994). Grooms were only allowed to wear clothes with less value than two
marks. Knights were allowed to wear clothes with a value till six marks, but they were
forbidden from wearing gold, ermine, or jeweled embroidery. The reason for the
differentiation was to keep fabrics and ornamentation for other social classes in order to
distinguish them and uphold order within the social hierarchy (Berry & Christoper,
1994).
Today, anyone can own a purse, a watch, or a pair of shoes, but there are differences in
the value of these products. So, nowadays it is still important for people to show their
status through goods (Trigg, 2001). Conspicuous consumption can be understood as
spending money on luxurious belongings to show income or wealth. Veblen, the ‘father’
of the expression conspicuous consumption, made the statement that the higher the price
1
www.telegraaf.nl
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the more attractive the product, because the price is taken as an indicator of the prestige
value (Veblen, 1899).
According to Trigg (2001), the search for status is never ending. This is because of the
fact that when a certain level of status is achieved, other people will also acquire goods in
order to achieve the same level of status. At that moment, nobody assigns status anymore
when all have acquired the goods (Trigg, 2001). This leads to a need for new
consumption goods in order to distinguish oneself from others (Trigg, 2001). So you can
conclude based on the findings of Trigg, that this status seeking is an endless process of
conspicuous consumption.
If you take the search for status as an endless process, can you take for granted that
people become happier of having more money and endless consumption? Many
researchers claim that consumption of certain conspicuous goods may increase happiness
by increasing status (Veblen, 1899; Charles et al, 2008). But if you take a look on the
results regarding income, it is not quite obvious. According to time series studies of the
United States, nine European countries and Japan, there is evidence that income growth
in a society does not increase happiness (Easterlin, 1995). According to Campbell, it
appears that the level of happiness is sometimes negatively related with expectation of
the economic growth and consumer expenditures (Campbell, 1981). For example,
researchers found in time series that ‘the proportion of people in the UK saying they are
‘very happy’ has fallen from 52% in 1957 to just 36% today’, whereas in the same period
the real income has become three times higher (Blanchflower & Oswald, 2004).
To conclude, economic development is not always an indicator of more happiness.
Researchers showed that economic development increases subjective well-being by
‘creating more individualistic cultures which encourage their members to pursue personal
happiness over honor and meeting social obligations’ (Veenhoven, 1999). So Veenhoven
(1999) stated that economic growth should especially lead to more happiness in
individualistic cultures. Individualistic versus collectivistic culture is one of the five
cultural dimensions of Hofstede. Individualism really focuses on the individual, through
emphasizing individual freedom, self-determination and personal independence
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(Hofstede, 2004). Individualism is directly opposed to collectivism. Collectivism
emphasizes the importance of the group through prioritizing group goals before
individual goals (Hofstede, 2004).
According to Wong (1997), the individualistic
characteristics are related to the characteristics of conspicuous consumption, in which
consumption of luxury belongings, are viewed as reflection of personal success and
achievement.
The thesis will try to examine if conspicuous consumption should lead to more happiness,
especially in an individualistic cultures.
§1.2
Problem statement
The problem indication leads to the following problem statement:
What is the influence of conspicuous consumption on well-being and how is this
influence moderated by the degree of individualism or collectivism in a culture?
§1.3
Research Questions
To solve this problem, it is necessary to split it up into the next research questions:
1. What is the well-being?
This research question will investigate the definition and the characteristics of well-being
and subjective well-being
2. What is conspicuous consumption?
This question will explore the definition and the characteristics of conspicuous
consumptions.
3. What is the influence of conspicuous consumption on subjective well-being?
This question will examine the relationship between conspicuous consumption and
subjective well-being.
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4. What are characteristics of the cultural dimension collectivism and
individualism?
The question will investigate the definition and the characteristics of this cultural
dimension.
5. How does individualistic versus collectivistic cultures moderate the influence
of conspicuous consumption on subjective well-being?
Related to the last research question, there will be tried to derive a hypothesis concerning
the relationship between the cultural dimension individualism/collectivism compared to
the influence of conspicuous consumption on subjective well-being.
§1.4
Academic relevance
For the academic relevance, I will try to provide in the first part a clear and
comprehensive framework of the domain of conspicuous consumption and subjective
well-being. It has already been conducted an extensive research analyzing conspicuous
consumption and subjective well-being separately, as well as the influence of income on
subjective well-being. Therefore I will categorize the empirical findings of last decades.
The second part is about the influence of the cultural dimension individualism or
collectivism on conspicuous consumption and well-being. It is not much known about the
influence of this cultural dimension, so consequently I will try to write a hypothesis to
provide new insights in this field.
§1.5
Managerial relevance
The framework could also be applied to a managerial setting. For marketers it is
really important to know for specific country and culture how to stimulate people to
conspicuous consumption. Conspicuous consumption is one of the main forces behind the
consumer boom of last years (Trigg, 2001).
It could also be relevant for public policy makers in their function to create awareness
that money does not always make people happier. So, it is possible that economic growth
does not make citizens happier, but e.g. self-employment, autonomy and (business)
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relationships do. Policy makers need to be aware of these factors, which are positively
influencing happiness.
§1.6
Structure and graphical representation
This bachelor thesis will contain a literature review and will end with a derivation
of hypothesis based on the first part. This will be appropriate because there already exists
a lot of research about conspicuous consumption and subjective well-being, but not about
the influence of the cultural dimension individualism or collectivism.
Chapter two will explain the characteristics of the variable well-being in order to gain a
clearer understanding of the expression well-being and subjective well-being. Chapter
three will analyze different characteristics of the variable conspicuous consumption.
Subsequently chapter four will discuss the influence of conspicuous consumption on
subjective well-being. Chapter five will investigate the characteristics of the variable
cultural dimension individualism and collectivism. Next to that in chapter five will be
tried to indicate, through which influences individualistic and collectivistic cultures get a
higher subjective well-being. Based on the previous discussion there will be tried to
answer if and in which way the cultural dimension moderates the influence of
conspicuous consumption on subjective well-being in chapter six. The thesis will end in
chapter seven with a short conclusion, discussion, limitations and recommendations for
further research..
Graphical representation of the variables
Conspicuous
consumption
Well-being
Cultural dimension:
Individualism/collectivism
Figure 1.2 Graphical representations of
the variables
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Chapter 2: Well-being
§2.1
Introduction
Even in the time of the philosopher Aristotle, people have started to evaluate the
quality of life, society and citizens. In the Ancient Greek, people reflected on the
satisfaction of life and happiness (Diener, 2009). Definition of happiness from the
rhetoric of Aristotle was: ‘happiness is prosperity combined with excellence, or
independence of life, or the secure enjoyment of the maximum of pleasure’ (Barnes,
1984)
§2.2
From Well-being to Subjective Well-being
Since that time, a lot of studies on well-being have followed. In the beginning,
negative emotional states were used as the starting point, afterwards they focused more
on the elements of positive emotions of well-being, such as happiness (Diener et al.,
1999). This new base of positive emotions of well-being, started with the survey of
Wilson (1967) which took more or less the same attributes of a typical happy2 person as
Aristotle had done: ‘young, healthy, well-educated, well-paid, optimistic, worry-free and
a wide range of intelligence’ (Wilson, 1967). These positive aspects are also reflected in a
today's definition of well-being, which is as follows: ‘a good or satisfactory condition of
existence; a state characterized by health, happiness, and prosperity’ (Grote Winkler
Prins Encyclopedia, 1984).
Psychologists got the awareness that self-reports, being evaluations of how well life is
going, are important information for the underlying emotional state (Diener et al., 1999).
Therefore the focus of well-being literature became measurement of life satisfaction
(Diener et al., 1999).The definition subjective well-being arose; ‘individuals' subjective
experience of their own lives’ (Diener et al., 1999). For the remaining chapters of the
thesis the definition of subjective well-being will be used.
2
Well-being is not the same as happiness, although the terms are often used synonymously. Happiness is
one of the most important measures of subjective well-being (Michalos, 2007)
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§2.3
Elements of Subjective Well-being
Subjective well-being consists of two elements: an affective part and a cognitive
part (Diener, 1994). The affective part is guided by emotions and feelings, whereas the
cognitive part is based on the judgments of the life compared to the expectations of the
ideal life, thus information-based (Diener, 1994). Positive and negative emotions are
strongly inversely correlated (Diener, 1994). This implies that if a person has negative
emotions, there is less chance that the person has positive emotions (Diener, 1994). As a
consequence, the literature on subjective well-being describes how and why people
experience their lives in positive or negative ways, including both cognitive judgments
and affective reactions (Diener et al., 1999).
§2.4
Influencing factors of Subjective Well-being
The factors influencing the subjective well-being have been discussed for years
(Campbell, 1976). The reason for the long discussion is the large numbers of factors that
can influence subjective well-being (Campbell, 1976).
According to Hoorn (2007) you can divide them in six broad groups: (1) personality
factors e.g. self-esteem, (2) contextual and situational factors e.g. marriage, family and
health, (3) demographic factors e.g. gender, age and race, (4) institutional factors e.g.
democracy, (5) environmental factors and (6) economic factors like income and
employment.
According to many psychologists the influence of personality has the strongest influence
on subjective well-being, for example through genes (Diener, 2009). Individuals respond
differently to events and show differences on self-assessments of well-being, this is
justified in personality characteristics (Helliwell, 2002). Besides personality factors,
economic factors are also important. These factors are especially important if differences
in economic circumstances exist (Hoorn, 2007). Concerning the economic factors, there
is evidence showing a positive relationship between income and subjective well-being
within countries (e.g., Larson, 1978). At the other hand, there are also researchers that
show the opposite. For example, Campbell (1981) indicated that when real income
increases in a country, people do not necessarily report more happiness. That could imply
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that only relative income matters (Hsee, 2009). Related to this, it is proved that people
who value money higher than other goals are less satisfied with their standard of living
and with their lives (Richins & Dawson, 1992).
§2.5
Theories about Subjective Well-being
In contrast with the large amount of factors which influence subjective well-
being, the theories for understanding subjective well-being is still limited in literature
(Diener, 2009). Two theories about subjective well-being will be presented here.
The first of the psychological theories is the Telic or Endpoint theory of subjective wellbeing. This theory maintains that happiness is gained when a specific state like a goal or
need is fulfilled (Diener, 2009). According to Wilson (1960) ‘satisfaction of needs causes
happiness and conversely, the persistence of unfulfilled needs causes unhappiness’.
According to Diener (2009) an individual has only goals or needs when something is
missing in his/her life.
The second theory that discusses subjective well-being is the Discrepancy theory of
satisfaction (Michalos, 1980). According to Michalos (1980), ‘individuals compare
themselves to multiple standards including other people, past conditions, aspirations and
ideal levels of satisfaction, and needs or goals.’ Especially social comparison is an
important factor (Michalos, 1980). If a person is better off than other persons or exceed
their own standards, that person will be satisfied or happy (Michelaos, 1980). Laboratory
studies demonstrate that happiness and satisfaction scores can be affected by the standing
of others (Diener & Fujita, 1997).
§2.5
Conclusion
Subjective well-being is a measure of how people feel about their lives or aspects
of their lives (Diener et al., 1999). According to Hoorn (2007), the main factors which
influence subjective well-being are personality factors, situational factors, demographic
factors, institutional factors, environmental factors and economic factors. You can
conclude from the literature, that personality and economic factors have a particularly
strong influence on subjective well-being.
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The Telic theory and the Discrepancy theory of satisfaction can be applied to the other
chapters, because they deal with important motives of conspicuous consumption.
Conspicuous consumption will be explained in the next chapter.
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Chapter 3: Conspicuous Consumption
§3.1
Introduction
Every time we make a decision to buy a good, we are not only thinking about the
effect on our welfare, but in addition we are also thinking about the indirect social effects
based on others’ opinions (Heffetz, 2004). The Philosopher Plato already said ‘men are
continually in competition for honour and dignity’, but also Adam Smith mentioned ‘a
creditable day-labourer would be ashamed to appear in public without a linen shirt’
(Smith, 1766).
§3.2
Start of research on Conspicuous Consumption
In 1899, Veblen introduced the new idea of conspicuous consumption, where
social comparison in consumption became important. Conspicuous consumption means
spending money on luxurious goods or services to show income or wealth (Veblen,
1899). Some examples of these goods or services are additional houses, expensive
interior decorations or lavish parties. Veblen (1899) used the term to explain the
behavioral characteristics between the leisure class and the working class in that time.
Members of a society often made, and still make, judgments of an individual’s position in
society and its wealth dependent on objects like the kind of house and car. Based on these
objects, they try to infer the individual’s status (Veblen, 1899).
The Veblen effect describes the behavior of status seeking through conspicuous
consumption (Veblen, 1899). It occurs when consumers simply increase their willingness
to purchase a good because it has a higher price (Bagwell and Bernheim, 1996). The
hidden motive is that high prices can function as a barrier to obtain a product, so the
barrier leads to increased attractiveness (Brehm et al. 1966).
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§3.3
Comparisons in Conspicuous Consumption
An important factor of conspicuous consumption represents social comparisons.
Veblen (1899) indicates that each social class tries to copy the consumption behavior of
the next higher class. According to Veblen (1899), this applies not only to the rich
people, even the poorest people have the pressure to engage in conspicuous consumption.
So, conspicuous consumption is not based on the absolute level of consumption, it is
rather based on the relative level of consumption or phrased differently the level of
consumption compared to other people (Duesenberry, 1949).
This process of acquiring goods in order to gain status is never ending, because at that
moment everyone has achieved the same level of status, the relative status disappears
(Trigg, 2001). From that moment, the process will start again with new consumption
goods. According to Bourdieu (1984), people need to be aware that this process is not a
conscious act, but people have a set of principles that influences unconscious decisions.
§3.4
Motives of Conspicuous Consumption
According to Veblen (1899), there are two motives for conspicuous consumption.
The first motive is ‘invidious comparison’ which refers to a member of a higher social
class who wants to differentiate himself from someone of a lower social class (Veblen,
1899). For example, this is related to lawyers who want to show their high income by
exposing the goods they can afford (Bagwell and Bernheim, 1996).
The second motive is ‘pecuniary emulation’. According to Bagwell and Bernheim
(1996), it occurs when a member of lower class consumes conspicuously so that people
think he belongs to the higher class. For people pecuniary emulation rather represents a
generalized status seeking motive (Friedman, 2006) for conformity instead of
differentiation reasons (Leibenstein, 1950).
According to Griskevicius, et al. (2007), specifically men have also another rationale to
consume conspicuous. This rationale is related to attract and maintain mates. Also in this
rationale, it is related to impress other people, in this situation specific to impress women.
Through this rationale men’s are spending more money on luxurious products and want
that it is publicly. This mating motive does not increase the spending on inconspicuous
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products (Griskevicius, et al., 2007). The difference between conspicuous and
inconspicuous consumption is related to if the good is more visible, expensive and
frivolous (Griskevicius, et al., 2007). Next to that Griskevicius et al. (2007) claim that
showing the wealth through conspicuous consumption, is to show the underlying
characteristics, like ‘intelligence, social skills and ability to compete for resources’. It can
be compared with peacocks; ‘just as peacocks’ tail displays indicate that male peacocks
are able to successfully absorb the cost of wasting metabolic resources on such frivolous
ornaments, men’s conspicuous consumption displays seem to indicate that they are
successfully able to absorb the cost of wasting financial resources on frivolous products’
(Griskevicius et al. 2007). If these men were not successful, it would be better to spend
the money on inconspicuous consumption like vacuum cleaners.
§3.6
Conclusion
Conspicuous consumption occurs if people are consuming goods and services to
impress other people (Veblen, 1899). According to this idea, individuals emulate the
consumption patterns of other individuals situated at higher point in the hierarchy. In the
next chapter, the effect of this emulation of consumption on well-being will be analyzed.
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Chapter 4: Influence of Conspicuous Consumption on
Subjective Well-being
§4.1
Introduction
To show the influence of conspicuous consumption on subjective well-being, it is
important to look firstly to the influence of relative and absolute wealth on happiness. A
lot of research has been done on the influence of relative and absolute wealth on
happiness (Hsee, et al., 2009). There are still different opinions in academic literature
whether happiness depends on absolute or relative levels of wealth (Hsee, et al., 2009).
§4.2
Absolute Subjective Well-being combined with Consumption
Some researchers say that absolute wealth and consumption level are important for
happiness (Hsee, et al., 2009). Easterlin and Crimmins (1991) investigated when people
think that they have a good life. Having goods such as ‘really nice clothes’ and ‘a
vacation home’ was mostly answered (Easterlin & Crimmins, 1991). There is a lot of
evidence that there is a positive relationship between absolute income and subjective
well-being (Diener, 1984). This means that people are in general happier with a higher
income. Correlations between income and subjective well-being in development
countries are low (Ahuvia & Friedman, 1998). Although people do not know how it is to
have more income or they even see that neighbors are worse off, they cannot be happy
when they live in bad conditions like suffering from hunger, or living in danger and
isolation (Veenhoven, 1991). According to the absolute view, reported life satisfaction is
higher in wealthy countries than in poor countries (Diener et al., 1993). This is the
consequence of the absolute wealth and consumption level. Hsee et al. (2009) showed
this difference through making a comparison between rich and poor societies. Within a
society, rich people are happier than poor people. However people of a rich society are in
general happier than people of poor countries and therefore the poor people of a rich
society are happier than the rich people of a poor society (Hsee, 2009).
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§4.3
Relative Subjective Well-being combined with Consumption
Other researchers suggest that happiness is rather dependent on relative than on
absolute levels of wealth and consumption (Hsee, et al., 2009). Subjective well-being is
judged by the comparison of the individual’s income and the incomes of others
(Easterlin, 1995). So, if all incomes increase, subjective well-being does not increase
because in relative terms the level stays the same (Duesenberry, 1949). The reason for
this, is that the positive feeling of individual income increase is offset by the negative
feeling of the growth in general incomes (Easterlin, 1995). According to a survey of
Solnick and Hemenway (1998) people would feel better in a world where they have 50
percent less real income, as long as they have a high relative income. As a conclusion,
satisfaction of life is not just about having more income, but having more income than
other people (Duncan, 1975).
According to Veenhoven (1991), subjective well-being is a result of comparison. People
are comparing themselves with other people and with their earlier living conditions. The
social comparison especially focuses on material level of living (Veenhoven, 1991). If
people think that they have a higher material standard of living, they are becoming
happier (Veenhoven, 1991). This also works the other way around. People become
unhappier, if they see that other people have a higher material standard of living
(Veenhoven, 1991). Like Bannerjee (1990) wrote: ‘it seems unquestionable that, for
people the pleasure they get out of a particular consumption bundle will be less if they
feel that everybody around them has more than they, than if they feel that they are pretty
much on a par with the rest of their group’. Also according to Luttmer (2005),
individuals’ subjective well-being is negatively affected by the earnings of others in their
area.
Comparisons are also made by earlier living conditions (Veenhoven, 1991). The more
people think their life is getting better compared to the past conditions, the happier they
are.
In addition, according to Veenhoven (1991) standards of comparison are adjusting. If
people think that their life is improving, they are getting happier, but this feeling cannot
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be permanently raised (Veenhoven, 1991). Standards will adjust through adapting to the
new circumstances. Because standards will adjust, changes of happiness through the new
circumstances will only be of short-term (Veenhoven, 1991).
§4.4
Influence of Conspicuous Consumption on Subjective Well-being
The important factor of conspicuous consumption compared to consumption in
general is the level of consumption in relation to other people and not the absolute level
of consumption (Duesenberry, 1949). According to the Discrepancy theory of
satisfaction, individuals compare themselves to multiple standards, especially to other
people (Michalos, 1985). People are happy when they are for example earning more
compared to others (Michalos, 1985). Based on the Discrepancy theory, you can say that
happiness is relative.
People think that they can buy happiness (Dittmar, 2005). The satisfaction of the
good is the result of the reaction from other consumers rather than the actual use of the
good (Wong, 1997). A good that is conspicuous can gain approval or acceptance by the
members of a group (O’Cass & McEwen, 2004). Looking at the research of relative
happiness (Veenhoven 1991), you can say that the feelings of happiness as the result of
conspicuous consumption will disappear. In the beginning people will become happier
because they bought a good which gave them prestige (Dittmar, 2005). However
according to Trigg (2001) the process of acquiring goods in order to gain a certain level
of status is never ending because at that moment everyone has gained the same level and
the status has disappeared. At that moment the standards of comparison adjust and the
happy feeling fades away and consequently a new loop of conspicuous consumption will
start, to get prestige and become happier (Trigg, 2001).
According to the Telic theory, people become happy when a specific state like a
goal or need is reached (Diener, 2009). The need in conspicuous consumption is to have
relative more luxurious belongings (Diener, 2009), with the thought to impress other
people. At the moment that people bought an expensive car and in this way satisfied their
need, they will be happy. Assigning the results of Trigg (2001) to the Telic theory means
that people will never reach the state of always being happy. People will always try to
improve their situation to get happier (Veenhoven, 1991). The vicious circle of fulfilling
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needs will start again from the beginning. You can compare it with the positional
treadmill of Frank (1985), which is the process in which each person strives to gain
advantage, but since all are trying to get ahead, all remain in the same relative position.
§4.5
Conclusion
There are still different opinions in academic literature whether happiness
depends on absolute or relative levels of wealth. According to the proponents of the
absolute view, subjective well-being is higher in wealthy countries than in poor countries.
This is the consequence of the absolute wealth and consumption level. According to the
proponents of the relative view, subjective well-being is a result of comparison with other
people and with their earlier living conditions. The important factor of conspicuous
consumption compared to consumption in general is the level of consumption in relation
to other people and not the absolute level of consumption. Therefore, the feeling of
happiness, as the result of conspicuous consumption will disappear. People will always
try to improve their situation to get happier. The vicious circle of fulfilling needs with
conspicuous consumption will start again from the beginning. Based on the theories and
the used literature, you can conclude that subjective well-being of conspicuous
consumption is based on a short term rather than on a long-term view. In the end nobody
will become happier of conspicuous consumption.
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Chapter 5: Cultural dimension Individualism versus
Collectivism
§5.1
Introduction
A culture exists of people who share values, beliefs, assumptions, norms, and
meanings of events or words that are learned over a period of time and often taken for
granted (Earley & Singh, 1995). Cultures are characterized by values (Hofstede, 2001;
Schwartz, 1994), which are prescriptions societies pursue to guide people in their
behavior in different kinds of situations (Glazer, 2006). Researchers have used
dimensions with their distinguishing values to show important differences across cultures
(Hofstede, 2001). Firstly, the chapter will consist of a short description of the dimension
individualism versus collectivism. Subsequent to this description, the change to a more
individualistic culture will be discussed, because this will show the link between the
economic development, subjective well-being and individualism.
§5.2
Dimension individualism versus collectivism
A lot of cross-cultural studies referred to the values of the dimension
individualism and collectivism. Before this dimension has been developed, Tönnies
(1957) came up with the distinction between community and society, and Durkheim
(1933), developed the idea of organic and mechanical solidarity.
Hofstede (1980) conducted the first broad-based studies in the area of cross-cultural
differences. The individualism/collectivism dimension characterizes ‘the degree to which
the identities of members of a particular culture are shaped by either personal choices or
by the group to which they belong’ (Koch & Koch, 2007).
Although some researchers claim that Hofstede’s value scales are not theoretically
grounded (McSweeney, 2002), the dimension gained a lot of recognition in the scientific
world. Hofstede’s individualism/collectivism dimension does indicate that they have
considerable usefulness. According to Smith and Dugan (1996) the dimension is the most
important yield of cross-cultural psychology.
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§5.3
Features Collectivism versus Individualism
According to Hofstede (2001) the definition of collectivism is ‘a society in which
people from bird onwards are integrated into strong, cohesive in-groups, which
throughout people’s lifetime continue to protect them in exchange for unquestioning
loyalty’.
Collectivistic societies focus on the ‘we’ consciousness. This means that collectivistic
societies have a collective identity, they act with fixed behavioral rules, they are
emotional dependent, they have a group solidarity, they share duties and obligation, they
have a need for stable and predetermined friendship and they make group decisions
(Hofstede, 1980). Later, Hofstede (2001) also found that group membership influences
the identity of a person. The identity is based on the individual’s role in a group and the
experiences of the group. Therefore, the characteristics of an individual relate to the goals
of the group. In a collectivistic culture, the group doesn’t deny a person’s well-being or
interest, but they assume that ‘maintaining the group’s well-being is the best guarantee
for the individual’ (Ho, 1978).
On the other hand, there are individualistic cultures. According to Hofdstede (2001) the
individualism pertains to ‘societies in which the ties between individuals are loose:
everyone is expected to look after him/herself and his/her immediate family’.
Individualistic societies focus on the ‘I’ consciousness. They are emotional independent,
they focus on autonomy and on individual initiative and specific friendships (Hofstede,
1980).
In individualistic cultures, the focus is more directed on the consequences of individual
behavior, needs, interests and goals (Hofstede, 1980). According to the later research of
Hofstede (2001) a person’s identity in an individualistic society, is mainly based on
individual’s personal experiences, successes, challenges, job and relationships with other
people.
Hui and Triandis (1986) found similar results. People in collectivistic cultures put more
emphasis on the outcome of their action which should contribute to the benefit of the
group that also includes sharing resources and even sharing bad outcomes. Through the
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sharing process, they feel to be a part of the group (Hui & Triandis, 1986). Groups in
collectivistic cultures are long-standing. Harmony and a minimum of open conflicts are
really important values, therefore direct confrontation with other individuals is
considered to be very rude (Hui & Triandis, 1986).
People living in individualistic cultures, share with their direct family, but are less
dependent on the collective goals, instead of personal goals (Hui & Triandis, 1986).
People feel responsible for their own success and failures and so willing to confront other
people.
§5.4
Linking Individualism versus Collectivism Dimension with Subjective Well-being
In individualistic and collectivistic cultures, subjective well-being comes from
different goals (Veenhoven, 1999). Subjective well-being in individualistic cultures
comes from the freedom which they rather experience than in collectivistic cultures
(Veenhoven, 1999). This freedom makes it possible for individualists to have fewer
restrictions and consequently more alternatives. Because of fewer restrictions they can
better follow their own wants, desires and needs. The choices of the individuals will
produce a beneficial outcome which is related to the ‘invisible hand’ of Adam Smith’s
liberal economic theory (Veenhoven, 1999). The autonomous people can control their
own life and follow the aim of self-actualization. According to Veenhoven (1999), the
more individualized a culture is, the higher the level of subjective well-being.
Critics of individualistic cultures say that individualism leads to corruption through hard
competition and selfishness between the people (Veenhoven, 1999). According to the
opponents, this will end in a big distance between the single individual and the society.
So, proponents of collectivism think that it is good to be dependent on the society, which
would as a solution reduce the big distance (Veenhoven, 1999). People achieve a higher
level of subjective well-being, if the group is satisfied, instead of self-satisfaction
(Veenhoven, 1999). Moreover, in collectivistic cultures, subjective well-being comes
from the security of the family (Veenhoven, 1999). Family can be seen as the motivation
to work and earn money. The goal of occupations is to provide a better life for their
families. According to Etzioni (1993), ‘individual rights conflicts with the needs of
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community’. Individualistic people create trouble, because they move away from family
and neighborhood which is vital for a good life. Moreover concepts like individualism
and market competition reduce trust and friendship (Lane, 1994). People in collectivistic
cultures focus on the social norms to maintain social harmony among the members of the
group. This will be done through a minimum level of conflict, helping each other and
tolerating other’s view (Sinha & Verma, 1987).
However in the end there is a higher positive relationship between individualism and
subjective well-being (Veenhoven, 1999). ‘The benefits of individualism are greater than
its costs’ (Veenhoven, 1999). Therefore, the focus in the next chapter will be directed on
the origination and the change to a more individualistic society.
§5.5
Change to a more individualistic society
Values of cultures can change over time (Ahuvia, 2002). The change happens in
every country in a different way, but the trend from tradition to modernity can be
explained through the individualistic values (Inglehart & Baker, 2000). According to
Kemmelmeier (2003) individualism comes from liberalism. The ideology focusing on the
liberty and freedom was a reaction on the authoritarian oppression during the 18th and
19th century (Triandis, 1995). The followers of the liberalism emphasized the ‘individual
self-determination, individual human rights, and the limitation of state control over the
individual’, which are the focal points of the democracy nowadays (Kemmelmeier,
2003). This ideology is the opposite of the ‘conformity to the group, enforcing group
cooperation and subordination to authority’, which relates to the values of collectivism
(Kemmelmeier, 2003).
In some collectivistic cultures it occurs that after a few generations higher level of wealth
reduces the dependency on people’s family, neighborhood, and other networks (Ahuvia,
2002). Since the liberalization, ‘capitalist economies offer job opportunities outside of
family based business and often outside the local geographic area’ (Ahuvia, 2002).
Liberalism changed also the background and motives of marriages (Ahuvia, 2002).
Whereas marriages in former times were influenced by family motives, nowadays the
major reasons are individual feelings of love.
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According to Ahuvia (2002), living in an affluent nation significantly reduces the
probability of serious poverty, because of the existence of government programs ensuring
their provision of a modest social security. For example, in Japan and Singapore a change
to a more individualistic culture has occurred, but affluence has developed (French, 2000;
Hiebert, 1996). However the older generation is concerned that younger people loose its
work ethic and sense of collective obligation (French, 2000). Nevertheless, in the end this
‘cultural transformation, in which obligation becomes less important and the pursuit of
happiness becomes more important, is going away from collectivism and in the direction
of individualistic cultural values and forms of social organization’ (Ahuvia, 2002).
Based on these arguments, you can conclude that there is a link between economic
development, subjective well-being and cultural change to individualism. Likewise
statistics prove this link. According to Hofstede (1980), the gross national product per
capita has a correlation coefficient of around 0.80 with national levels of individualistic
values. ‘At a societal level, these changes incur a clear cost in a social capital, but at an
individual level, subjective well-being seems to increase’ (Veenhoven, 1999).
Veenhoven (1999) also concluded that happiness is negatively linked with individualism
in poor countries. On the other hand, happiness is positively linked with individualism in
rich countries. According to Ahuvia (2002), collectivism is positively linked with
happiness in poor countries, because it is highly functional in these countries. On the
other hand, if societies modernize and the needs change, they give priority to
individualism (Ahuvia, 2002). This proposes that the economic development and
modernization as well as individualistic values are belonging together (Ahuvia, 2002).
§5.6
Conclusion
Specific dimensions, such as Hofstede’s individualism and collectivism
dimension, were used to show important differences between cultures. Collectivism
implies that people are integrated by birth into strong, cohesive groups that protect them
in exchange for unquestioning loyalty. These people put emphasis on family, group
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goals, group decisions and the well-being of the whole group. Individualism in cultures
implies loose ties; everyone solely cares for his own situation and in some cases for his
own direct family, but not further. Typical values are self-actualization, freedom,
autonomy and competition. Collectivism and individualism deeply pervade cultures,
however cultural values can change to the direction of individualism through
modernization. In conclusion this chapter and the statistics show that economic
development, subjective well-being and cultural change to individualism are positively
related to each other.
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Chapter 6: Influence of Individualism versus Collectivism on
Subjective Well-being with Conspicuous Consumption
§6.1
Introduction
The connection between economic development, consumption and subjective
well-being is complex and related to many factors (Ahuvia, 2002). Like described in
chapter five, individualism and collectivism has also an influence on economic
development and subjective well-being. Although this cultural dimension is generally
used in describing differences between cultures, many of the values associated with
individualism and collectivism can be applied to consumption and the concept of
conspicuous consumption.
§6.2
Relationship between values
Economic development increases subjective well-being by ‘creating a cultural
environment where individuals make choices to maximize their happiness rather than
meet social obligations’ (Veenhoven, 1999). This cultural description goes away from
obligations but focusing on the pursuit of happiness, which relates to the cultural
dimension of individualism and the linked cultural values (Ahuvia, 2002).
According to chapter five, individualism can be characterized by ‘emotional detachment
from groups, priority of personal goals over group goals, emphasize competition and
focus on personal achievement’. These values correspond to those people who value
conspicuous consumption. This is explainable, because the values of individualism relate
to the goal of conspicuous consumption, which consists of the purchase of luxury
products as a reflection of a person’s success and achievement (Wong, 1997).
Collectivism has been described in chapter five by ‘the attributes of family integrity, self
definition through social roles, hierarchical social structures, and strong ingroup/outgroup
distinctions’. These values can be understood as the priority of personal relationships
over physical belongings (Wong, 1997).
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Moreover, like described in chapter three, the incentives of conspicuous consumption are
invidious comparison and pecuniary emulation. Phrased differently and shortly, as a first
incentive a person of a high class wants to differentiate himself/herself from a lower class
and as a second incentive a person of a lower class consumes conspicuously because the
person wants to belong to a higher class. People of individualistic cultures want to show
their own success in a way that they are doing better than others (Leake & Black, 2005).
Representatives of collectivistic cultures think that individualists are too competitive and
focused on material rewards (Kohn, 1992) People of collectivistic cultures achieve
satisfaction from cooperation with persons of their group. If the group has accomplished
something, they are successful (Kohn, 1992). In conclusion, people of individualistic
cultures rather tend to conspicuous consumption, because individualistic characteristics
relate to the incentives of conspicuous consumption.
Moreover, which is typical for an individualistic cultures, is that persons have personal
needs which focus on ‘self-identity, independence and self-sufficiency’ (Markus &
Kitayama, 1994). They display their self-identity with physical belongings to experience
recognition in public (Wong, 1997).
People in collectivistic cultures value physical belongings which improve their
relationship with other people of their group, but set their social status aside (Wong,
1997). They have needs emphasizing respect, which comes from both ‘possession of
socially accepted attributes and socially ascribed goals’ (Katayama et al., 1997). To
conclude based on these statements, people in collectivistic cultures value physical
belongings due to its private meaning and people in individualistic cultures for their
public meaning.
§6.3
Intrinsic versus extrinsic values
Also according to Kasser (1997), you have to encourage a society in which
economic development releases people from networks of social obligation. Kasser (1997)
explains that through intrinsic and extrinsic values and goals of people. Intrinsic goals
can be described as the motivation of what people want to be and do, whereas extrinsic
goals are ‘results of what someone ought to be or do’ (Kasser, 1997). The extrinsically
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motivated pursuit of goals is related to a lower level of self-actualization (Carver &
Baird, 1998). The shift toward individualistic cultures which is related to economic
development helps people create life-styles that are consistent with their own preferences
and capacities (Veenhoven, 1999), and consequently follow their intrinsic goals (Ahuvia,
2002). Illustrating conspicuous consumption, people buy status-oriented products because
they want to impress others with the hidden goal that it will make them personally happy
(Ahuvia, 2002). People in individualistic cultures strive to their own happiness. This is
the essence of the independent self-definition, the character of an individualist culture
(Wong & Ahuvia, 1997).
In contrast to the characteristics of a collectivistic culture where people define their
identity in terms of their public role, their duties and their reputations they have towards
the group (Wong & Ahuvia, 1997). Based on chapter five, you can say that the
collectivistic aim is maintaining the group’s well-being, because that is the best guarantee
for the individual.
According to chapter three, conspicuous consumption includes the trade-off between
benefits from status seeking and the losses from neglecting purchase of more intrinsically
useful products. Consistent with this consideration, people in individualistic cultures
make their own decision and bear the consequences. In individualistic countries people
emphasize their own preferences and have a greater ability to act independently
(Veenhoven, 1999). As follows from chapter five, people in collectivistic cultures, make
decisions contributing to the group instead of the individual benefit in order to maintain
the well-being of the group.
§6.4
Conclusion
There is an economic development, when people are free from networks of social
obligation and are autonomous. This in turn, reduces social capital and increases
individual’s ability to make choices that meet their intrinsic needs. By choosing a career,
friendships and a lifestyle to meet personal intrinsic needs, one increases the state of
subjective well-being. Thus, individualistic cultures tend on average to produce higher
levels of subjective well-being, because people can make their own decisions concerning
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their way of living, which also includes the freedom of consumption. Based on the
characteristics of conspicuous consumption, buying luxurious belongings in order to
show their own success and income, and based on the characteristics of individualism
versus collectivism, striving to their own well-being instead of striving to the well-being
of the group, you can conclude that people are getting happier in individualistic cultures
through conspicuous consumption.
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Chapter 7: Conclusion, discussion, limitations and further
research
In conclusion, individualistic cultures, conspicuous consumption and subjective
well-being are positively related. Although happiness of conspicuous consumption occurs
only on a short-term period, people in individualistic cultures become happier with
conspicuous consumption.
However there are also limitations of this conclusion. The greater autonomy based on the
free choice and the various opportunities to pursue happiness, also includes a high price
which people have to bear if they take a wrong decision. Like Veenhoven (2001) said:
‘constantly at risk of making wrong choices’.
In chapter five it is concluded that cultures changed to more individualistic values
through modernization. However it also said in chapter five that the older generations are
concerned that younger people loose its work ethic and sense of collective obligation
through individualistic values. So it cannot directly be stated that subjective well-being of
this generation gets higher rather than lower. In these changing cultures, there is no
guarantee that the overall well-being is increasing.
In conclusion, you can not directly say that all people in individualistic cultures have a
higher subjective well-being through conspicuous consumption. However, it can be said
that that a higher subjective well-being is an evident consequence of conspicuous
consumption in individualistic cultures
Furthermore, it is important to mention that the terms subjective well-being and
happiness are used synonymously during the thesis. However there are differences.
Subjective well-being is the scientific expression for people’s self-evaluation of their life.
This can refer to the evaluation of specific situation of life like marriage or the general
life satisfaction (Diener, 2009). Subjective well-being is the collection of the different
types of people’s evaluation of their life. So it doesn’t only include happiness, but also
feelings like fulfillments and self-esteem.
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This thesis specializes on happiness, as a part of subjective well-being, for different
reasons. First of all, most research has been done on happiness. Second, happiness is one
of the most important measures of subjective well-being (Michalos, 2007) because people
in Western countries see individual’s happiness as the ‘be-all and end-all of life’ (Ahuvia,
2002). People think that every action in their life is motivated by achieving happiness.
However, according to cross-cultural research in individualistic and collectivistic
cultures, there are different goals for human actions (Ahuvia, 2002). In individualistic
cultures, there are goals like ‘enjoying life and an exciting life’ (Triandis et al., 1990). In
collectivistic cultures, there are goals like ‘humble and honoring parents and elders’
(Triandis et al., 1990).
Future research should not only be focused on happiness, but also on other aspects of
subjective well-being. If you buy luxury products to impress others, people think that it
will make them happy in the end. However, happiness is just one goal that underlies this
action.
Furthermore in the future, it can be interesting to direct focus on the differences between
different classes in a society. In chapter three, it is mentioned that there are two motives
of conspicuous consumption. One of the motives is pecuniary emulation. People of the
lower class consume conspicuously to get the sentiment of belonging to a higher class. It
would be interesting for further research to deepen the subject about class differences by
analyzing the origin, motives and consequences for the single individuals and the whole
society.
Finally, it is recommended to empirically test the hypothesis based on real world data to
proof the generalization and external validity of the hypothesis of the thesis.
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Wong, N. and Ahuvia, A (1997) ‘Personal taste and family face: Luxury consumption
in confusion and western societies’, Psychology and Marketing 15, 423–441.
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Books
Barnes, J. (1984). The complete Works of Aristotle. Princeton University Press, Princeton,
NJ.
Berry, C.J. (1994) The idea of luxury : a conceptual and historical investigation
Cambridge University Press, Cambridge, MA
Bourdieu, P. (1984) Distinction: A Social Ciritque of the Judgement of Taste. London:
Routledge
Campbell, A. (1981). The sense of well-being in America: Recent pattern and trends.
New York: McGraw-Hill
Durkheim, E. (1933) The Division of Labor in Society, translated by George Simpson.
New York: Macmillan.
Etzioni, A. (1993). The spirit of community. The reinvention of American society.
Simon & Schuster, New York, USA
Frank, R.H. (1985). Choosing the right pond. New your: Oxford University Press.
Hofstede, G. (1980). Culture's consequences: International differences in work-related
values. Newbury Park, CA: Sage.
Hofstede, G. (2001), Culture’s consequences, comparing values, behaviors, institutions
and organizations across nations, London, CA:Sage.
Hofstede, G. (2004). Cultures and Organizations. McGraw-Hill Companies
Kohn, A. (1992). The brighter side of human nature: Altruism and empathy in everyday
life. New York: Basic Books.
Schor, Juliet (1998), The Overspent American: Upscaling, Downshifting, and the New
Consumer. Basic Books, New York.
Schwartz, S. H. (1994). Beyond individualism/collectivism: New cultural dimensions of
values. Thousand Oaks, CA: Sage.
Sinha, J.B.P. and Verma, J. (1987). Structure of collectivism. Lisse, The Netherlands:
Swets & Zeitlinger.
Smith, A. (1776), An Inquiry into the Nature And Causes of the Wealth of Nations.
(http://www.adamsmith.org/smith/won-b5-c2-article-4-ss2.htm, August 2004)
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Tönnies, F. (1957) Community and Association. Michigan: Michigan State University
Press
Triandis, H. C. (1995). Individualism and collectivism. San Francisco, CA: Westview
Press.
Veblen, Thorstein (1899), The Theory of the Leisure Class. Reprint 1965, MacMillan,
New York.
Websites
Telegraaf (2010): ‘Verkoop iPad begonnen.’
http://www.telegraaf.nl/dft/nieuws_dft/6452631/__Verkoop_iPad_begonnen__.html?sn=
dft
Bachelor thesis
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Appendix
§1.6
Time schedule
Period
Week 8
Date (if necessary)
Thursday, February
25
Research step
First group meeting: discussion of the
topic.
Week 9
Monday and
Tuesday
Reading articles for determination
topic
Week 9
Wednesday,
Thursday, Friday
-
Week 10
Wednesday,
February 10
First individual meeting with B.
Briers: comments on research
proposal.
Searching for more articles about my
topic: well-being and conspicuous
consumption.
Correct and improve the research
proposal based on the feedback of the
supervisor and articles.
Writing chapter 2: characteristics of
well-being based on the articles which
I found
Writing chapter 3: characteristics of
conspicuous consumption based on the
articles which I found
Writing chapter 4: start with
relationship between conspicuous
consumption and well-being
Friday, April 9
Submit chapter 1, 2, 3 to B. Briers and
fellow students in my group
Week 10
Week 11
Week 12
Week 13
Week 14
Week 14
Week 15
Week 16
Bachelor thesis
Making research proposal based on
template and articles
Delivering research proposal
- Reading the first chapters of the
fellow students in my group and
preparing a discussion
- Second group meeting: discussion of
the first chapters.
- Correct chapter 1,2,3,4 according to
feedback of the group and B. Briers
End writing chapter 4.
Sofie Peters (263226)
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Week 17
Week 17
Week 18
Thursday, April 29
Week 19 + 20
Week 20
Week 20
Friday, May 21
Week 21
Week 21
Monday, May 31
Week 21 + 22
Week 22
Week 25
Week 26
Bachelor thesis
Friday, June 11
Writing chapter 5: explain what the
characteristics of
individualism/collectivism are
Submit first draft (3000-4000 words)
- Individual meeting with B. Briers
about the first draft
- Correct first draft according to the
feedback of B. Briers
Writing chapter 6 and 7: answer main
question and write short conclusion,
discussion and limitations
Reviewing the thesis
Submit complete draft version 60008000 words
Reading final drafts of fellow students
in the group and preparing a
discussion
Third group meeting with B. Briers
and fellow students about discussion
of final draft.
Correct complete draft according to
the feedback of fellow students and B.
Briers
Submit final thesis
Preparing presentation thesis defence
Third individual meeting with B.
Briers with the thesis defence.
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