In a big city, you don't know all that. You have to make your judgment of people based on more shallow indicators of status. If you show the outer markers of wealth, then surely you have also made important contributions to the community.
I think that is where spending for status comes from: the lack of context about status based on your own worth, replacing it with status items.
Of course, it may have come from big cities, but spending for status is plenty prevalent in small towns, too. And I think that is because of our much better communication tools. Now rural people tend to judge themselves against not just locals but also urban friends.
What difference does this make? Probably none at all. Just thinking.