The theoretical foundation of the paper draws on Thorstein Veblen’s 1899 insight that some goods are consumed primarily because they are seen. Diamonds, branded clothing, weddings, and smartphones advertise their owner’s position in a social hierarchy, and their value as signals depends on how much others can observe. Engel’s law, by contrast, states that as household income falls, the share of the budget devoted to food rises, making food expenditure a reliable indicator of economic stress. Jadhav’s framework links the two: in communities where the consumption of visible goods is highly dispersed, the return to signaling rises, because the gap between rich and poor neighbors is legible to everyone. Households respond by diverting resources toward status goods, and because budgets are finite, the marginal rupee spent on display comes at the expense of nutrition and other essentials.

Testing this idea required a way to measure the visibility of inequality itself, not merely its magnitude. Jadhav uses India’s nationally representative Household Consumption Expenditure Surveys for 2022–23 and 2023–24, recent rounds that were conducted with modern methodology and cover consumption across rural and urban India. From these surveys, he classifies households into low, medium, and high inequality environments based on the dispersion of conspicuous spending within reference groups, so that inequality is defined locally, in the environment a household actually observes, rather than at the national level. Conspicuous consumption is captured through categories of spending that are publicly visible to neighbors and peers, while essential consumption is proxied by food expenditure, the classic Engel metric.

The estimation strategy is deliberately conservative. Population-weighted regressions are estimated for both expenditure levels and budget shares of conspicuous goods and food, with controls for household income, demographic characteristics, and fixed effects that absorb unobserved differences across regions and survey rounds. By modeling budget shares as well as levels, the analysis distinguishes between households that spend more on visible goods simply because they are richer and households that devote a larger fraction of a given budget to display. The results point firmly to the second interpretation. Higher local inequality is associated with significantly higher conspicuous consumption and larger conspicuous budget shares, alongside reductions in food expenditure and in the share of the budget going to food.

The most striking finding concerns who bears the cost of this trade-off. The effect is stronger among poorer households and among socially marginalized groups, precisely the families least able to afford the reallocation. For a wealthy household, spending a bit more on a visible good may leave nutrition untouched. For a household near subsistence, the same pressure to signal competes directly with calories. This asymmetry means that visible inequality does not merely redistribute prestige; it generates what the paper describes as hidden welfare costs, in the form of foregone nutrition and essentials that never appear in income statistics. The welfare loss is invisible in standard measures of poverty, which count what a household earns or owns, but not what it felt compelled to spend on status.

These results place India in a growing international literature on positional consumption. Earlier work by Pierre Roychowdhury found evidence of status competition and conspicuous spending in rural India, and studies in the United States by Kerwin Charles, Erik Hurst, and Nikolai Roussanov documented that conspicuous consumption is higher among groups that feel further behind their reference peers. Experimental work by Niro Sivanathan and Nathan Pettit has shown that threats to self-worth increase demand for status goods, and researchers such as Luttmer have shown that subjective well-being depends on relative earnings as much as absolute income. Jadhav’s contribution is to combine the signaling logic with the Engel-curve logic in one dataset and to show that the two mechanisms operate simultaneously: inequality raises the demand for display and depresses the share of spending on food, exactly as the trade-off framework predicts.

The behavioral mechanism matters for policy because it changes how the costs of inequality should be counted. If inequality harmed households only through material deprivation, then transfers calibrated to close income gaps would, in principle, be sufficient. But if inequality also operates through social comparison, inducing households to misallocate their own budgets, then even a household whose income is adequate may end up undernourished because its reference group is visibly rich. In that world, two households with identical incomes and identical food prices will consume different amounts of nutrition depending only on how unequal their neighborhoods are. Jadhav’s findings, which persist after controlling for income and demographics, are consistent with precisely this scenario.

The timing of the study gives it additional relevance. India’s 2022–23 and 2023–24 consumption surveys arrived after a decade of rapid but uneven growth, in which digital connectivity, social media, and mass retail have made lifestyles at the top of the distribution more visible than ever to households at the bottom. A wedding procession, a new vehicle, or a smartphone is no longer glimpsed occasionally at a festival; it is displayed continuously on screens that reach every village. If the visibility of inequality has increased, the Veblen–Engel mechanism implies that the pressure to signal has intensified as well, with consequences for food budgets that policy built on income data alone would miss.

The paper also speaks to a long-running puzzle in Indian nutrition statistics. Researchers including Angus Deaton and Jean Drèze have documented that per capita calorie consumption in India has been stagnant or declining even as incomes rose, a pattern that standard demand theory struggles to explain. Explanations have ranged from declining physical activity to changing tastes and improved health environments. The present study adds a competitive explanation rooted in status: some of the income that growth delivered to poor households may have been absorbed by status competition before it could reach the plate. If so, then economic growth alone does not guarantee nutritional improvement in unequal societies, because a fraction of every incremental rupee is contested by the signaling motive.

Jadhav is careful about what the data can and cannot establish. The analysis relies on publicly available household consumption surveys, and the classification of goods as conspicuous versus essential involves judgment, since many purchases serve both purposes. A smartphone is a work tool and a status symbol; a wedding feast is a celebration and a declaration. The study’s defense is that its results hold for broad, standard categories and across both expenditure levels and budget shares, using population weights and extensive controls, with regression results reported in an appendix using the fully weighted specification. The paper received no external funding, and the author declares no conflicts of interest.

The implications extend beyond India. Developing economies from Latin America to sub-Saharan Africa exhibit sharp local inequalities in which slums border gated communities and village hierarchies are instantly legible to all. If the Veblen–Engel trade-off generalizes, then the welfare accounting of inequality in such settings is systematically incomplete: statisticians see the cars and the smartphones but not the meals that were never eaten to buy them. Nutrition programs, food subsidy schemes, and poverty-line calculations that ignore status competition may overestimate how far a transfer will go and underestimate the true cost of the inequality that surrounds the poor.

For now, the study’s message is a reframing of an old moral intuition. Social reformers have long complained that the poor sacrifice necessities for display, and economists have often dismissed the claim as moralizing. Jadhav’s results give that intuition a quantitative footing rooted in two canonical economic laws: when inequality is visible, signaling pays, and signaling crowds out food. The cost of inequality, on this evidence, is not only that some people have less. It is that everyone living in the shadow of visible disparity spends differently, and the poorest spend in ways that quietly hollow out their own well-being.