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The Effects of Ethnic Identity on Household Budget Allocation to Status Conveying Goods

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Abstract

The theory of compensatory consumption suggests that a possible lack of traditional avenues for fulfilling needs for social status may lead ethnic minorities to shift measures of social status from traditional indicators such as occupational prestige to consumption indicators of status conveying goods. In this study we investigate whether a household’s ethnic identity affects its budget allocation to status conveying goods. Annual budget shares for apparel, housing, and home furnishings are used for measuring status consumption. Results show that Asian American households allocate more of their budget to housing, while African American more to apparel, compared to European households. Hispanic households allocate more of their budget to both apparel and housing than European American households, but to a lesser degree compared to Asian Americans to housing and African Americans to apparel.

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Acknowledgement

The authors wish to acknowledge Dr. Robert N. Mayer and Dr. Armando Solorzano, as well as the anonymous reviewers for their insightful comments on earlier versions of this paper.

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Correspondence to Angela Fontes.

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Fontes, A., Fan, J.X. The Effects of Ethnic Identity on Household Budget Allocation to Status Conveying Goods. J Fam Econ Iss 27, 643–663 (2006). https://doi.org/10.1007/s10834-006-9031-x

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