Title

Keeping Up Appearances: An Experimental Investigation of Relative Rank Signaling

Author(s)

Pascaline Dupas Pascaline Dupas (Princeton University and CEPR and NBER)

Marcel Fafchamps Marcel Fafchamps (Stanford University and NBER)

Laura Hernandez-Nunez Laura Hernandez-Nunez (Columbia University)

Abstract

We investigate the potential welfare cost of relative rank considerations using a series of vignettes and lab-in-the-field experiments with over 2,000 individuals in Abidjan, Ivory Coast. We show that: (1) individuals judged to be of a lower rank are perceived as more likely to be sidelined from beneficial opportunities in many aspects of life; and (2) in response, individuals distort their appearance and consumption choices in order to appear of higher rank. These effects are strong and economically significant. As predicted by a simple signaling model, the distortion is larger for individuals with low (but not too low) socio-economic status.

Creation Date

2024-05

Section URL ID

Paper Number

URL

https://www.nber.org/papers/w32491

File Function

Jel

C90; D91; J70

Keyword(s)

Suppress

false

Series

13