and urbanization – precisely the conditions under which Veblen originally theorized conspicuous consumption would be most important. Recent estimates suggest that approximately 130 million of 330 million global luxury good consumers are located in emerging markets.<sup>5</sup> In Indonesia, for instance, there are an estimated 74 million middle-class consumers, and this number is expected to double by 2020.<sup>6</sup> Such individuals are obtaining access to credit cards and a broader set of visible consumption and luxury goods.

_Isolating the demand for status._ The first experiment shows that a substantial part of the demand for the platinum card is explained by the desire to own the prestigious card itself, beyond the tangible benefits and services it comes with. The innovation of this experiment is to engineer a control product which holds constant all the instrumental benefits of the platinum credit card, while stripping away the associated status component. Specifically, we offer paid credit card upgrades to a population of bank customers. In a control group, customers are offered all the financial services and instrumental benefits of the platinum card, made available as a benefits upgrade on a nondescript credit card. In a treatment group, customers are instead offered an upgrade to an actual platinum card. In both groups, customers are truthfully told that they were randomly selected to receive the offer, to avoid providing information about their relative income and status.

We find that demand for the platinum card (21% take-up at market price) is substantially higher than demand for the instrumental benefits it comes with (14% at the same price), providing prima facie evidence of demand for the status aspect of the card.<sup>7</sup> The difference in demand for the two offers (7 percentage points) is economically meaningful: offering a 25% price discount on the instrumental benefits package in the control group increases take-up by only 3.7 percentage points. Surveys and interviews of customers assigned to the control group suggest that the benefits package was fully credible. Despite believing that they would receive the exact same benefits and services as platinum card-holders, control group customers were less likely to accept the offer.

Demand for the status aspect of the card _decreases_ with income. It is the relatively lower-income individuals in the sample who show the highest demand for the status aspect of the platinum card. By contrast, the richest customers show no differential demand for the actual platinum card compared to the instrumental benefits upgrade. Our interpretation is that richer individuals already have ways to signal their income, while the platinum credit cards are a more powerful (marginal) signaling tool for those with comparatively lower incomes.

> 5See “Luxury Goods Worldwide Market Study” _Bain & Company_ , 2014. See Banerjee and Duflo (2008) for evidence on the consumption patterns of middle-class households around the world.

> 6See “Indonesia’s Rising Middle-Class and Affluent Consumers”. _Boston Consulting Group_ , 2013.

> 7In a slightly modified variation of the platinum card script we instead truthfully informed customers that they were selected as a result of being among the bank’s top customers. In principle, this might boost customers’ selfimage, yet it has little additional impact on take-up (23% compared to 21% for those informed they were selected at random). Note also that both scripts are truthful. The sample for this first experiment consisted of existing customers who are both selected to be higher income than the typical bank customer, _and_ drawn randomly from the list of such customers, as well as randomly assigned to treatments. Thus, the customers are truly randomly selected and also truly chosen based on their income.

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