Why Chinese Elites buy what they buy

Abstract

In 1899, Thorstein Veblen introduced socially contingent consumption into the economic literature. However, it was not until recent years that empirical studies of his theory begin to appear in mainstream economic literature with diversified conclusions. This article complements the scarce empirical literature by testing his conjecture on consumers in China's transitional economic context. Three sets of hypotheses were tested with a sample of 1,021 Chinese consumers. The findings of the study support Veblen's contention, especially the argument advanced by Leibenstein (1950) that the primary motivation for conspicuous consumption rests on social status seeking and position enhancement. With a rising per capita income in China and the birth of an elite social class, conspicuous consumption has to some extent replaced the traditional Chinese values of modesty and frugality in search of social recognition and self-realisation.