Keeping Up Appearances: An Experimental Investigation on Relative Rank Signaling

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, Côte d’Ivoire. We show that: (1) individuals judged to be of a lower rank are perceived as more likely to be victimized 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) SES.