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Redistribution and the Notion of Social Status

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  • Ennio Bilancini

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  • Leonardo Boncinelli

    ()

Abstract

In this paper we study the impact of redistributive policies when agents can signal their relative standing by spending on a conspicuous good. In particular, we analyze how the shape of the status function (i.e. how relative standing is computed and evaluated) may affect the equilibrium outcome of the model. Our main nding is that, if status depends in a cardinal way on individuals' relative standing, then a redistribution from the rich to the poor can be Pareto improving. We identify a necessary and sucient condition for the latter case.

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File URL: http://www.recent.unimore.it/wp/RECent-wp29.pdf
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Bibliographic Info

Paper provided by University of Modena and Reggio E., Dept. of Economics in its series Center for Economic Research (RECent) with number 029.

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Length: pages 21
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:mod:recent:029

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Web page: http://www.recent.unimore.it/
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Keywords: social status; relative standing; consumption externalities; redistribution; signalling; conspicuous consumption; income inequality;

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Citations

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Cited by:
  1. Bilancini, Ennio & D'Alessandro, Simone, 2012. "Long-run welfare under externalities in consumption, leisure, and production: A case for happy degrowth vs. unhappy growth," Ecological Economics, Elsevier, vol. 84(C), pages 194-205.
  2. Bilancini, Ennio & Boncinelli, Leonardo, 2014. "Instrumental cardinal concerns for social status in two-sided matching with non-transferable utility," European Economic Review, Elsevier, vol. 67(C), pages 174-189.
  3. Friehe, Tim & Mechtel, Mario, 2014. "Conspicuous consumption and political regimes: Evidence from East and West Germany," European Economic Review, Elsevier, vol. 67(C), pages 62-81.

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