Do We Pay For Status?

Conventional wisdom holds that consumers are often "duped" into paying exorbitant prices for luxury goods that serve as status symbols.   Is that true?  Are we paying a significant premium for status?  HBS Professor Daniel Matter has been studying this question for some time.  He argues, "We like to believe that people pay for status for purely symbolic reasons, but the empirical evidence for that has been weak at best."  He explains, "To get at the symbolic value of status, we have to find evidence that buyers are willing to place a premium on status, holding constant quality and the reputation for quality... Look around and you may be hard-pressed to find a high-status producer that consistently produces second-grade products or a low-status producer that consistently produces first-grade products."  Matter's research suggests that the conventional wisdom may not be true. Consumers aren't being duped after all.  They aren't paying for status over substance, in most cases.  It's an interesting perspective.  For more, check out this article on the HBS Working Knowledge site.