Status Goods: Experimental Evidence from Platinum Credit Cards
Status Goods: Experimental Evidence from Platinum Credit Cards
7 July, 2020 •Similar Articles
Bank-Insured RoSCA for Microfinance: Experimental Evidence in Poor Egyptian Villages
Microfinance institutions (MFIs) have continued to grow over the past few decades, both in numbers of clients and portfolio sizes. The growth of th...
Barriers to Household Risk Management: Evidence from India
Why do many households remain exposed to large exogenous sources of non-systematic income risk? We use a series of randomized field experiments in ...
Savings defaults and payment delays for cash transfers: Field experimental evidence from Malawi
Financial products and transfer schemes are typically designed to improve welfare by helping individuals follow through on their intertemporal plan...
This paper provides novel field-experimental evidence on status goods. We work with an
Indonesian bank that markets platinum credit cards to high-income customers. In a first
experiment, we show that demand for the platinum card greatly exceeds demand for a nondescript
control product with identical benefits, suggesting demand for the pure status aspect of the card.
Transaction data reveal that platinum cards are more likely to be used in social contexts, implying
social image motivations. Combining price variation with information on the use of the card
sheds light on the magnitude of the demand for social status. In a second experiment, we provide
evidence of positional externalities from the consumption of these status goods. The final
experiment shows that increasing self-esteem causally reduces demand for status goods. We infer
that part of the demand for status is psychological in nature, and that social image is a substitute
for self-image.