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Gambling to Leapfrog in Status?

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  • Mario Mechtel

    ()
    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

  • Tim Friehe

    ()
    (Center for Advanced Studies in Law and Economics Rheinische Friedrich-Wilhelms-Universität Bonn)

Abstract

This paper shows that households with positional concerns and convex status utility use gambling to attempt leapfrogging in the social hierarchy. We test this theoretical prediction relying on household data that is representative for Germany, proxying the status orientation of households by their expenditures for conspicuous consumption. Our empirical results strongly indicate that households who care about status are more likely to participate in gambling and invest more in gambling, while they save less.

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Paper provided by Institute of Labour Law and Industrial Relations in the European Union (IAAEU) in its series IAAEU Discussion Papers with number 201404.

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Date of creation: Apr 2014
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Handle: RePEc:iaa:dpaper:201404

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Keywords: conspicuous consumption; status; relative income; gambling; behavioral economics;

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