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Wealth Distribution Dynamics with Status Preference: asymmetric motivations for status

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  • Yutaro Hatta

    (Graduate School of Economics, Osaka University)

Abstract

This paper explores the implications of status-seeking behavior in wealth for economic dynamics. I move away from the conventional setup of status preference. That is, individuals with higher wealth behave differently as compared to those with lower wealth; agents with different wealth have asymmetric motivations for social status: mathematically, there is a kink in status utility, which is empirically suggested. The main results are as follows: the stability of the equal steady state in an economy is determined by which agents have higher motivations for status. Depending on parameter values, whether inequality may diminish or persist is determined. Inequality and output are intricately related, due to asymmetric motivations.

Suggested Citation

  • Yutaro Hatta, 2013. "Wealth Distribution Dynamics with Status Preference: asymmetric motivations for status," Discussion Papers in Economics and Business 13-08, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1308
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1308.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Status-seeking; Relative wealth; Wealth Distribution;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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