Are Luxury Brand Labels and “Green” Labels Costly Signals of Social Status? An Extended Replication

Costly signaling theory provides an explanation for why humans are willing to a pay a premium for conspicuous products such as luxury brand-labeled clothing or conspicuous environmentally friendly cars. According to the theory, the extra cost of such products is a signal of social status and wealth and leads to advantages in social interactions for the signaler. A previous study found positive evidence for the case of luxury brand labels. However, an issue of this study was that some of the experiments were not conducted in a perfectly double-blind manner. I resolved this by replicating variations of the original design in a double-blind procedure. Additionally, besides the luxury label condition, I introduced a “green” label condition. Thus, the hypothesis that signaling theory is able to explain pro-environmental behavior was tested for the first time in a natural field setting. Further, I conducted experiments in both average and below-average socioeconomic neighborhoods, where, according to signaling theory, the effects of luxury signals should be even stronger. In contrast to the original study, I did not find positive effects of the luxury brand label in any of the five experiments. Nor did I find evidence for a green-signaling effect. Moreover, in poor neighborhoods a negative tendency of the luxury label actually became evident. This suggests that a signaling theory explanation of costly labels must take into account the characteristics of the observers, e.g. their social status.