Abstract: This paper develops a theory of conspicuous conservation, a phenomenon related to conspicuous consumption in which individuals seek status through displays of austerity amid growing concern about environmental protection. We identify a statistically and economically significant conspicuous conservation effect in vehicle purchase decisions and estimate a mean willingness to pay for the green signal provided by the distinctively designed Toyota Prius in the range of $430 to $4,200 depending upon the owner's location. Results are related to the growing literature on green markets and suggest policy should target less conspicuous conservation investments that will be under-provided relative to those that confer a status benefit.
1 North Carolina State University
2 Abt Associates, Inc.
Available online 26 December 2013; In Press, Accepted Manuscript
Keywords: Conspicuous consumption; Signaling; Impure public good; Green markets; Conservation; Hybrid