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What makes us want to have more than others? Explaining relative consumption effects of public and private goods

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  • Hillesheim, Inga
  • Mechtel, Mario

Abstract

We conduct a survey with 264 participants to test for relative consumption effects of national and local public goods as well as private goods. In contrast to previous results, we find that relative consumption effects are more pronounced for private goods than for public goods. Our second finding is that relative consumption effects are less pronounced for local public goods than for national public goods. We discuss and test different explanations for a good's degree of positionality and find that these can, in part, account for our results very well. --

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Bibliographic Info

Paper provided by University of Tuebingen, Faculty of Economics and Social Sciences in its series University of Tuebingen Working Papers in Economics and Finance with number 4.

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Date of creation: 2011
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Handle: RePEc:zbw:tuewef:4

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Keywords: Relative consumption; Positional goods; Public good spillovers; Non-psychological costs;

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References

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  1. Klor, Esteban F. & Shayo, Moses, 2010. "Social identity and preferences over redistribution," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 269-278, April.
  2. Olof Johansson-Stenman & Fredrik Carlsson & Dinky Daruvala, 2002. "Measuring Future Grandparents" Preferences for Equality and Relative Standing," Economic Journal, Royal Economic Society, vol. 112(479), pages 362-383, April.
  3. Ng, Yew-Kwang, 1987. "Relative-Income Effects and the Appropriate Level of Public Expenditure," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 293-300, June.
  4. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2005. "How much do we care about absolute versus relative income and consumption?," Journal of Economic Behavior & Organization, Elsevier, vol. 56(3), pages 405-421, March.
  5. Fredrik Carlsson & Olof Johansson-Stenman & Peter Martinsson, 2007. "Do You Enjoy Having More than Others? Survey Evidence of Positional Goods," Economica, London School of Economics and Political Science, vol. 74(296), pages 586-598, November.
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Cited by:
  1. Inga Hillesheim, 2012. "Relative consumption and majority voting: supplementing Oates’ “Decentralization Theorem”," Journal of Economics, Springer, vol. 105(1), pages 29-43, January.
  2. Inga Hillesheim & Mario Mechtel, 2012. "Relative Consumption Concerns or Non-Monotonic Preferences?," IAAEU Discussion Papers 201201, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  3. Inga Hillesheim & Mario Mechtel, 2012. "How Much Do Others Matter? Explaining Positional Concerns for Different Goods and Personal Characteristics," IAAEU Discussion Papers 201210, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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