Fooling the eye of the beholder: deceptive status signalling among the poor in developing countries

Poor consumers in the developing world use a variety of status signalling devices that rely on deception of the observer. A frequently used deceptive strategy is the consumption of counterfeit instead of original status-intensive goods, mainly cheap copies of expensive brand-name goods from developed countries. The choice for such deceptive modes of conspicuous consumption is analysed within a product characteristics approach as developed by Lancaster and compared with nondeceptive alternatives. Under the controversial assumption that the poor care about status, it is shown that counterfeit goods embody a more ʹappropriateʹ combination of status and functionality than original goods. It appears that the consumption of counterfeits potentially enhances the welfare of low-income consumers, depending on the extent to which the eye of the relevant beholder is effectively deceived.