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The Dependence Effect, Consumption and Happiness: Galbraith Revisited

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  • Amitava Krishna Dutt

Abstract

In his analysis of the affluent society, Galbraith argued that advertising and the sales promotion activities of firms create wants for people, which makes them consume more without making them better off, because their wants were artificially created. Thus, in the affluent society, ever-increasing levels of production (and consumption) do not increase welfare. This paper considers three criticisms of Galbraith's analysis: first, firms cannot 'create' wants for consumers without their consent, because consumers are not mere pawns in their hands; second, even if people's wants are created, they may be better off by consuming more; and third, that expansion of consumption can make people better off by expanding aggregate demand. It draws on the recent literature on consumption, income and happiness, and develops a simple model of growth and distribution, to argue that Galbraith's analysis holds up against these criticisms.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/09538250802308919
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Review of Political Economy.

Volume (Year): 20 (2008)
Issue (Month): 4 ()
Pages: 527-550

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Handle: RePEc:taf:revpoe:v:20:y:2008:i:4:p:527-550

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Cited by:
  1. Yun Kim, 2012. "Emulation and Consumer Debt: Implications of Keeping-Up with the Joneses," Working Papers 1208, Trinity College, Department of Economics.
  2. Yun Kim & Soon Ryoo, 2013. "Income Distribution, Consumer Debt, and Keeping Up with the Joneses: a Kaldor-Minsky-Veblen Model," Working Papers 1302, Trinity College, Department of Economics.
  3. Jakob Kapeller & Bernhard Schütz, 2012. "Debt, Boom, Bust: A Theory of Minsky-Veblen Cycles," Economics working papers 2012-14, Department of Economics, Johannes Kepler University Linz, Austria.
  4. Charpe, Matthieu & Flaschel, Peter, 2013. "Workers’ debt, default and the diversity of financial fragilities," Structural Change and Economic Dynamics, Elsevier, vol. 27(C), pages 48-65.
  5. Jakob Kapeller & Bernhard Schütz, 2012. "Conspicuous consumption, inequality and debt: The nature of consumption-driven profit-led regimes," Economics working papers 2012-13, Department of Economics, Johannes Kepler University Linz, Austria.
  6. Liselot Hudders & Mario Pandelaere, 2012. "The Silver Lining of Materialism: The Impact of Luxury Consumption on Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 13(3), pages 411-437, June.

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