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Materialism on the March: From conspicuous leisure to conspicuous consumption?

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  • Frijters, Paul
  • Leigh, Andrew

Abstract

This paper inserts Veblen's [Veblen, T., 1898, The Theory of the Leisure Class. The Viking Press, New York] concepts of conspicuous leisure and conspicuous consumption into a very simple model. Individuals have the choice to either invest their time into working, leading to easily observable levels of consumption, or into conspicuous leisure, whose effect on utility depends on how observable leisure is. We let the visibility of leisure depend positively on the amount of time an individual and her neighbors have lived in the same area. Individuals optimize across conspicuous leisure and conspicuous consumption. If population turnover is high, individuals are made worse off, since the visibility of conspicuous leisure then decreases and the status race must be played out primarily via conspicuous consumption. Analyzing interstate mobility in the US, we find strong support for our hypothesis: a 1percentage point rise in population turnover increases the average work week of non-migrants by 7Â min. We end with discussing the pros and cons of mobility taxes to offset the negative externality of population turnover on the visibility of conspicuous leisure.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 37 (2008)
Issue (Month): 5 (October)
Pages: 1937-1945

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Handle: RePEc:eee:soceco:v:37:y:2008:i:5:p:1937-1945

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Web page: http://www.elsevier.com/locate/inca/620175

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Keywords: Conspicuous consumption Conspicuous leisure Materialism Labor supply Mobility Status;

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References

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  1. Van Praag, Bernard M.S., 1977. "The perception of welfare inequality," European Economic Review, Elsevier, vol. 10(2), pages 189-207.
  2. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
  3. Veblen, Thorstein, 1899. "The Theory of the Leisure Class," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1899.
  4. van de Stadt, Huib & Kapteyn, Arie & van de Geer, Sara, 1985. "The Relativity of Utility: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 179-87, May.
  5. Andrew E. Clark and Andrew J. Oswald, . "Satisfaction and Comparison Income," Economics Discussion Papers 419, University of Essex, Department of Economics.
  6. Bill Dupor & Wen-Fang Liu, 2003. "Jealousy and Equilibrium Overconsumption," American Economic Review, American Economic Association, vol. 93(1), pages 423-428, March.
  7. KNIGHT, John & SONG, Lina & GUNATILAKA, Ramani, 2009. "Subjective well-being and its determinants in rural China," China Economic Review, Elsevier, vol. 20(4), pages 635-649, December.
  8. Harald Uhlig & Lars Ljungqvist, 2000. "Tax Policy and Aggregate Demand Management under Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 90(3), pages 356-366, June.
  9. Stutzer, Alois & Lalive, Rafael, 2001. "The Role of Social Work Norms in Job Searching and Subjective Well-Being," IZA Discussion Papers 300, Institute for the Study of Labor (IZA).
  10. Larry Samuelson, 2004. "Information-Based Relative Consumption Effects," Econometrica, Econometric Society, vol. 72(1), pages 93-118, 01.
  11. Ireland, Norman J., 1998. "Status-seeking, income taxation and efficiency," Journal of Public Economics, Elsevier, vol. 70(1), pages 99-113, October.
  12. Layard, Richard, 1980. "Human Satisfactions and Public Policy," Economic Journal, Royal Economic Society, vol. 90(363), pages 737-50, December.
  13. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
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Cited by:
  1. Aronsson, Thomas & Johansson-Stenman, Olof, 2009. "Conspicuous Leisure: Optimal Income Taxation when both Relative Consumption and Relative Leisure Matter," UmeÃ¥ Economic Studies 774, Umeå University, Department of Economics.
  2. Redzo Mujcic & Paul Frijters, 2013. "Conspicuous Consumption, Conspicuous Health, and Optimal Taxation," Discussion Papers Series 483, School of Economics, University of Queensland, Australia.
  3. Andrew E. Clark & Conchita D'Ambrosio, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," PSE Working Papers halshs-00967938, HAL.
  4. Ian Davidoff & Andrew Leigh, 2013. "How Do Stamp Duties Affect the Housing Market?," The Economic Record, The Economic Society of Australia, vol. 89(286), pages 396-410, 09.
  5. repec:hal:wpaper:halshs-00590436 is not listed on IDEAS
  6. Laszlo Goerke, 2013. "Relative Consumption and Tax Evasion," CESifo Working Paper Series 4077, CESifo Group Munich.
  7. Bogaerts, Tess & Pandelaere, Mario, 2013. "Less is more: Why some domains are more positional than others," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 225-236.
  8. Andreas Chai & Wolfhard Kaus, 2013. "Signalling to whom? Conspicuous spending and the local density of the social group income distribution," Papers on Economics and Evolution 2012-18, Max Planck Institute of Economics, Evolutionary Economics Group.

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