Identity, Consumption and Financial Security of Households in Poland
Abstract: The paper applies the concept of identity to investigate whether consumer behavior matters for a household’s financial security. It is assumed that considerable part of households may express their identity through status consumption. First, the index of financial security is built and used to investigate the level of financial security experienced by working-age families in Poland. Second, the simulation results based on an econometric model are employed to find the answer to the question: Does financial insecurity result more from the need to manifest consumption at the higher level than average in an income-group of which people are members, or people want to be distinguishable inside of own income-group but they do not identify with a group having consumption at visibly higher level, or from the need to improve self-image by bringing own consumption closer to the pattern of a group with higher wealth status of which they are not members? The source of data is the 2005-2009 Households Budget Surveys in Poland. The findings point at display consumption as a main cause of households’ financial insecurity in Poland. The need to be distinguishable inside own income-group shapes the consumption prototype of the insecure rich while a desire to improve self-image by approaching own consumption to the highest expenses seems to be the dominant consumer behavior rather for the insecure poor. Keywords: social identity, status consumption, financial insecurity
