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Conspicuous consumption and satisfaction

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  • Rainer Winkelmann

Abstract

Traditional tools of welfare economics identify the envy-related welfare loss from conspicuous consumption only under very strong assumptions. Measured income and life satisfaction offers an alternative for estimating such consumption externalities. The approach is developed in the context of luxury car consumption (Ferraris and Porsches) in Switzerland. Results from household panel data and fixed effects panel regressions suggest that the prevalence of luxury cars in the municipality of residence has a negative impact on own income satisfaction.

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Bibliographic Info

Paper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 030.

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Date of creation: Sep 2011
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Handle: RePEc:zur:econwp:030

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Keywords: Ferrari; Porsche; status; consumption externality; Swiss Household Panel;

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Citations

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Cited by:
  1. Tim Friehe & Mario Mechtel, 2012. "Conspicuous Consumption and Communism: Evidence from East and West Germany," IAAEU Discussion Papers 201203, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  2. Mario Mechtel & Tim Friehe, 2014. "Gambling to Leapfrog in Status?," IAAEU Discussion Papers 201404, 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).
  4. Cahit Guven, 2009. "Reversing the Question: Does Happiness Affect Consumption and Savings Behavior?," SOEPpapers on Multidisciplinary Panel Data Research 219, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Perez-Truglia, Ricardo, 2013. "A test of the conspicuous–consumption model using subjective well-being data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 146-154.
  6. Bruno Frey & Jana Gallus & Lasse Steiner, 2014. "Open issues in happiness research," International Review of Economics, Springer, vol. 61(2), pages 115-125, June.
  7. Hillesheim, Inga & Mechtel, Mario, 2013. "How much do others matter? Explaining positional concerns for different goods and personal characteristics," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 61-77.
  8. Safarzyńska, Karolina, 2013. "Evolutionary-economic policies for sustainable consumption," Ecological Economics, Elsevier, vol. 90(C), pages 187-195.
  9. 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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