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Relational Consumption and Nonlinear Dynamics in an Overlapping Generations Model

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  • Angelo Antoci

    ()
    (University of Sassari)

  • Mauro Sodini

    ()
    (University of Pisa, Department of Statistics and Mathematics Applied to Economics)

  • Luca Zarri

    ()
    (Department of Economics (University of Verona))

Abstract

In this paper, we show that incorporating the relational dimension into an otherwise standard OLG model and focusing on dynamic leisure externalities leads to dramatically different predictions. Here we show that when the old perceive private and relational consumption as substitutable goods, a series of interesting dynamic outcomes - such as local indeterminacy, non-linear phenomena (including chaotic dynamics) and even multiple equilibria with global indeterminacy - may arise. We also draw some welfare implications and relate them to the well-known ‘happiness paradox’ arising within contemporary affluent societies.

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Bibliographic Info

Paper provided by University of Verona, Department of Economics in its series Working Papers with number 13/2012.

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Length: 25
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:ver:wpaper:13/2012

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Keywords: overlapping generations framework; growth; leisure; relational goods; happiness paradox;

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  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. Duranton, Gilles, 2001. "Endogenous labor supply, growth and overlapping generations," Journal of Economic Behavior & Organization, Elsevier, vol. 44(3), pages 295-314, March.
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  5. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2011. "See you on Facebook! A framework for analyzing the role of computer-mediated interaction in the evolution of social capital," MPRA Paper 29998, University Library of Munich, Germany.
  6. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," MPRA Paper 13750, University Library of Munich, Germany.
  7. Dora L. Costa & Matthew E. Kahn, 2003. "Understanding the American Decline in Social Capital, 1952--1998," Kyklos, Wiley Blackwell, vol. 56(1), pages 17-46, February.
  8. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2012. "The Solaria syndrome: Social capital in a growing hyper-technological economy," Journal of Economic Behavior & Organization, Elsevier, vol. 81(3), pages 802-814.
  9. Daniel S. Hamermesh, 2002. "Timing, togetherness and time windfalls," Journal of Population Economics, Springer, vol. 15(4), pages 601-623.
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  17. Graham, Liam & Oswald, Andrew J., 2010. "Hedonic capital, adaptation and resilience," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 372-384, November.
  18. Fabio Sabatini & Angelo Antoci & Mauro Sodini, 2009. "The Fragility of Social Capital," Working Papers 2009.16, Fondazione Eni Enrico Mattei.
  19. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2007. "Social capital accumulation and the evolution of social participation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(1), pages 128-143, February.
  20. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  21. Stefano Bartolini & Ennio Bilancini & Maurizio Pugno, 2008. "Did the Decline in Social Capital Depress Americans’ Happiness?," Department of Economics University of Siena 540, Department of Economics, University of Siena.
  22. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
  23. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2008. "Participation, growth and social poverty: social capital in a homogeneous society," MPRA Paper 13661, University Library of Munich, Germany.
  24. de Vilder, Robin, 1996. "Complicated Endogenous Business Cycles under Gross Substitutability," Journal of Economic Theory, Elsevier, vol. 71(2), pages 416-442, November.
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