Saying “people prefer buying status to saving money” is no different from saying “people prefer buying fancy cars to saving money”. Pointing out that people are buying status as well as cars doesn’t explain why they consistently prefer to buy status now rather than save for status later.
Yeah, I should clarify that I don’t think the myopia explanation and the conspicuous explanation are at odds with each other. Ultimately it’s myopia that causes people to spend rather than invest right now. But we might also want to know why people are spending so much on the things they do, so that we can figure out how to encourage them to save instead.
Also, people definitely do buy fancy (i.e. expensive) cars. And houses, clothes, jewelry, etc. You say that people “don’t want to be seen as bragging”, but when someone wears a $100,000 diamond wedding ring, what else is that but bragging?
In the case of cars, people will say, “I have a car so that I can go from point A to point B.” A house “is there so that I have shelter to live in.” Clothes are “to protect me from the elements.”
The only example you mentioned that doesn’t seem to have to have an alternative motive is jewelry. But even in the case of a diamond ring, people usually say that they’re buying it so that they can show how much they care about their partner, not that they’re trying to show how wealthy they are.
In the case of cars, people will say, “I have a car so that I can go from point A to point B.” A house “is there so that I have shelter to live in.” Clothes are “to protect me from the elements.”
Luxury / sports cars aren’t for going from A to B faster. Luxury houses and designer dresses aren’t for shelter or protection from the elements.
Jewelry (and expensive watches, etc) does have an additional element where in some (many) societies, it’s the traditional default for a man to buy them for a woman. So when you see a woman with an expensive ring, you might think “rich husband” instead of or as well as “rich wife”. And indeed, historically, men often owned most or all money (and land, animals, ….) while women could own jewelry (and expensive clothes, tools, art, …). So several things are being signaled. But displaying wealth is still important—otherwise more people would sell their expensive rings after consummating the marriage.
Yeah, I should clarify that I don’t think the myopia explanation and the conspicuous explanation are at odds with each other. Ultimately it’s myopia that causes people to spend rather than invest right now. But we might also want to know why people are spending so much on the things they do, so that we can figure out how to encourage them to save instead.
In the case of cars, people will say, “I have a car so that I can go from point A to point B.” A house “is there so that I have shelter to live in.” Clothes are “to protect me from the elements.”
The only example you mentioned that doesn’t seem to have to have an alternative motive is jewelry. But even in the case of a diamond ring, people usually say that they’re buying it so that they can show how much they care about their partner, not that they’re trying to show how wealthy they are.
Luxury / sports cars aren’t for going from A to B faster. Luxury houses and designer dresses aren’t for shelter or protection from the elements.
Jewelry (and expensive watches, etc) does have an additional element where in some (many) societies, it’s the traditional default for a man to buy them for a woman. So when you see a woman with an expensive ring, you might think “rich husband” instead of or as well as “rich wife”. And indeed, historically, men often owned most or all money (and land, animals, ….) while women could own jewelry (and expensive clothes, tools, art, …). So several things are being signaled. But displaying wealth is still important—otherwise more people would sell their expensive rings after consummating the marriage.