The paper develops a signalling theory of conspicuous consumption where the drive toward spending on an otherwise unuseful good comes from the desire to enter clubs and bene¯t from the provision of club good ¯nanced by members of a club and from a social status e®ect.Individual incomes are unobserved and admission to a club is based on the inference of an individual's capacity to contribute to the public good.By entering in a club, individual also gain a certain social status.This inference in turn is based on the signal emitted by spending on a conspicuous good.Because of the joint incentives of club good and social status, people may be induced to over-spend in the conspicuous good.We characterize both the pooling equilibria and the separating equilibria of the signalling game played by individuals.We then ask whether taxation can be Pareto-improving and which tax scheme would be chosen by the median voter in this society.