The Power of the Hoody-Wearing CEO
Bellezza went to Milan and asked some clerks at luxury boutiques (Armani, Valentino, etc.) to imagine a woman entering the store wearing either gym clothes or a fur coat. Others were to imagine a woman in flip-flops and a Swatch, or in high heels and a Rolex. Clerks then judged her likely financial and celebrity status. Of the hypothetical shoppers, the casually attired were judged wealthier and more important. One clerk said, “Wealthy people sometimes dress very badly to demonstrate superiority,” and that “if you dare enter these boutiques so underdressed, you are definitely going to buy something.”
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The economist Nick Feltovich and his colleagues have done work demonstrating that this kind of behavior—known as costly signalling—can also lead high-status people to avoid being ostentatious. Imagine three groups of people: those with low, medium, and high amounts of a desirable trait, like wealth. Someone without much income would have to make big sacrifices to buy a BMW. If you’ve got a bit more money—you’re a medium—it’s easier for you to signal wealth, and you might buy status symbols so that no one mistakes you for a poor person. A really wealthy person, on the other hand—a high—can distinguish himself from the mediums by choosing not to send costly signals of wealth. If he has enough secondary signals of status—a prime address, a high-profile list of friends—he’ll feel secure in not being mistaken for poor. (Understatement can also work when signalling talent, popularity, or intellect. Thus, Harvard graduates say only that they went to school “in Boston.”)