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Growth and the relativity of satisfaction

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  • de la Croix, David

Abstract

We extent Ramsey’s model to be in accordance with the facts that self-reported satisfaction levels are almost unrelated to economic prosperity, both across countries and across time. We assume that things are judged by the extent to which they depart from collective norms. Norms are based on the past experience of all agents. A special case is when norms are build on the basis of the best previous experience. Agents do not internalize their own effect on collective norms and the competitive equilibrium is thus sub-optimal. An optimal solution could however be decentralized by a planner. The dynamics displays oscillations, slow adjustment speed or path dependency and substantial transitory effects of fiscal policy.

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Bibliographic Info

Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 36 (1998)
Issue (Month): 2 (September)
Pages: 105-125

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Handle: RePEc:eee:matsoc:v:36:y:1998:i:2:p:105-125

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Web page: http://www.elsevier.com/locate/inca/505565

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  1. Ng, Yew-Kwang, 1980. "Money and Happiness: First Lesson in Eudaimonology?," Kyklos, Wiley Blackwell, vol. 33(1), pages 161-63.
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  9. de la Croix, David, 1996. "The Dynamics of Bequeathed Tastes," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1996004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  10. de la Croix, David & Palm, Franz C. & Pfann, Gerard A., 1996. "A dynamic contracting model for wages and employment in three European economies," European Economic Review, Elsevier, vol. 40(2), pages 429-448, February.
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Cited by:
  1. ARTIGE, Lionel & CAMACHO, Carmen & DE LA CROIX, David, . "Wealth breeds decline: reversals of leadership and consumption habits," CORE Discussion Papers RP -1743, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Thi Kim Cuong PHAM & Phu NGUYEN-VAN, 2009. "Endogenous Fiscal Policies, Environmental Quality, and Status-Seeking Behavior," Working Papers of BETA 2009-22, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  3. Patterson, Trista M. & Niccolucci, Valentina & Bastianoni, Simone, 2007. "Beyond "more is better": Ecological footprint accounting for tourism and consumption in Val di Merse, Italy," Ecological Economics, Elsevier, vol. 62(3-4), pages 747-756, May.
  4. Jaime Alonso-Carrera & Jordi Caballé & Xavier Raurich, 2004. "Welfare Implications of the Interaction between Habits and Consumption Externalities," UFAE and IAE Working Papers 639.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  5. Jaime Alonso-Carrera & Jordi Caball?Author-Email: jordi.caballe@uab.es & Xavier Raurich, 2001. "Income Taxation with Habit Formation and Consumption Externalities," UFAE and IAE Working Papers 496.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  6. de la Croix, David, 2001. "Growth dynamics and education spending: The role of inherited tastes and abilities," European Economic Review, Elsevier, vol. 45(8), pages 1415-1438, August.
  7. Théophile AZOMAHOU & Phu NGUYEN VAN & T. Kim-Cuong PHAM, 2003. "Relativité de la satisfaction dans la vie : une étude sur données de panel," Working Papers of BETA 2003-06, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  8. Brown, Gordon D. A. & Gardner, Jonathan & Oswald, Andrew J. & Qian, Jing, 2005. "Does Wage Rank Affect Employees' Wellbeing?," IZA Discussion Papers 1505, Institute for the Study of Labor (IZA).
  9. Dimitrios Varvarigos, 2010. "Non-Monotonic Welfare Dynamics in a Model of Sustained Income Growth," Discussion Papers in Economics 10/02, Department of Economics, University of Leicester.
  10. Collard, Fabrice & de la Croix, David, 1996. "Gift exchange and the business cycle: the fair wage strikes back," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Apr 1997.
  11. Easterlin, Richard A., 2001. "Life cycle welfare: evidence and conjecture," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 30(1), pages 31-61, January.
  12. Easterlin, Richard A. & Sawangfa, Onnicha, 2007. "Happiness and Domain Satisfaction: Theory and Evidence," IZA Discussion Papers 2584, Institute for the Study of Labor (IZA).
  13. Varvarigos, Dimitrios, 2011. "Non-monotonic welfare dynamics in a growing economy," Journal of Macroeconomics, Elsevier, vol. 33(2), pages 303-312, June.

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