I used to dress down at work because that's how everyone else dressed and I just wanted to fit in. But at some point I stopped doing that because I was caring way too much about what other people were thinking.
I dress nice because I like it. It makes me feel good about myself, but has nothing to do with compensating.
People react differently towards me depending on how I dress. It's quite noticeable. The sensible thing to do is take advantage of it.