31.12.2020

Politics and the Consumption of Luxury Goods

DUBOIS, David | KIM, Christine | PARK, Brian

Political views can tell us a lot about a person, not just what they might do in the ballot box. How someone sees their place in the social hierarchy, or whether they consider themselves liberal or conservative, can affect the decisions they make as consumers.

Noting that “luxury goods are instrumental to status signaling”, HKUST’s J. Christine Kim and her co-authors wondered whether a person’s political leanings might correlate with their choice of goods and brands to purchase and own. To explore this, they conducted a set of real-world studies on “a simple but critical question: Does political ideology affect the preference for luxury goods, and if so, how?”

The researchers started by looking at car purchases in the United States over a 12-month period. They collected data on the voting preferences of thousands of car buyers—limited to supporters of the two major parties—and their social status, based on income and level of education. “Among the high-status buyers,” the researchers report, “Republicans purchased more luxury cars than Democrats did.”

To further explore the underlying driver of this effect, the researchers’ second study tests how the effect varies when the goal for the luxury purchase is for maintaining one’s current social status versus when it is for advancing it. They created three advertisements for the same eyewear product varying in status emphasis: one status-neutral, one suggesting that buyers would maintain their existing status by purchasing the item, and one suggesting that buyers would “update” their status. “Novel to our work,” say the researchers, “and unique to the group of Republicans, these consumers were much more drawn to the product emphasizing status maintenance than the one emphasizing status advancement.”

Finally, the researchers turned to another set of consumers and asked them to reflect on their attitudes toward status before indicating how much they would be willing to pay for a set of headphones. The Republicans were willing to pay on average 150% of what the Democrats were happy to spend and this difference was driven by those who had just spent time thinking about maintaining their status.

These three test cases showed a clear relationship between political leanings and the desire for luxury goods. Republican shoppers were more likely to buy luxury goods when they thought the purchase would preserve—if not necessarily advance—their status. “In other words,” the researchers explain, “conservatives don’t buy the Rolex or the Patek Phillippe to advance their social standing, but rather out of a strong desire to maintain or conserve their social status.”

The authors’ findings could have clear benefits for the luxury goods market, which is worth US$262 billion globally. With consumers’ politics now easier to uncover by mining data on their online engagement, together with the geographical mapping of more or less conservative-leaning areas, brands can directly target customers most likely to be attracted to luxury goods. They can also capitalize on the “lipstick effect”—the rise in conspicuous consumption in troubled times, especially among Republicans. According to the authors, their work “will help luxury brands to identify the channels, the positioning, and the messages to nudge these consumers more effectively along the customer journey.”

KIM, Christine

Assistant Professor
Marketing