Keeping up with the richer Joneses drives household spending habits
Upward-looking comparisons make people spend more to keep up with wealthier neighbors. A study using data from German households found that when people see others spending more, they tend to increase their own spending by about 0.3%. For example, a 100 euro increase in what richer households spend leads to an 18 euro increase in what others spend. This shows a connection between income inequality and overall spending habits.