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Status Aspirations, Wealth Inequality, and Economic Growth

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  • Oded Stark

Abstract

This paper argues that an increase in the inequality of wealth prompts a stronger quest for status that in turn fosters the accumulation of wealth. It proposes a measure for an individual's want of social status. For a given level of a population's wealth, the corresponding aggregate measure of want of social status is shown to be positively related to the Gini coefficient of wealth inequality. Hence, the Gini coefficient and growth are positively correlated, holding the population's wealth constant.

Suggested Citation

  • Oded Stark, 2006. "Status Aspirations, Wealth Inequality, and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 171-176, February.
    • Handle: RePEc:bla:rdevec:v:10:y:2006:i:1:p:171-176
    DOI: 10.1111/j.1467-9361.2005.00309.x
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    1. Zweimuller, Josef, 2000. "Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth," Journal of Economic Growth, Springer, vol. 5(2), pages 185-206, June.
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    4. Oded Stark, 1990. "A Relative Deprivation Approach to Performance Incentives in Career Games and Other Contests," Kyklos, Wiley Blackwell, vol. 43(2), pages 211-227, May.
    5. Stark, Oded, 2000. "On a Variation in the Economic Performance of Migrants by their Home Country's Wage," Discussion Papers 281248, University of Bonn, Center for Development Research (ZEF).
    6. Oded Stark, 1991. "The Migration of Labor," Blackwell Books, Wiley Blackwell, number 1557860300, April.
    7. Fishman, Arthur & Simhon, Avi, 2002. "The Division of Labor, Inequality and Growth," Journal of Economic Growth, Springer, vol. 7(2), pages 117-136, June.
    8. Msuya, John, 1999. "Nutrition Improvement Projects in Tanzania: Appropriate Choice of Institutions Matters," Discussion Papers 280058, University of Bonn, Center for Development Research (ZEF).
    9. Schultze, Uta, 2000. "Insights from Physics into Development Processes: Are Fat Tails Interesting for Development Research?," Discussion Papers 280882, University of Bonn, Center for Development Research (ZEF).
    10. Wimmer, Andreas & Schetter, Conrad, 2002. "State-Formation First. Recommendations For Reconstruction And Peace-Making In Afghanistan," Discussion Papers 18740, University of Bonn, Center for Development Research (ZEF).
    11. repec:bla:kyklos:v:43:y:1990:i:2:p:211-27 is not listed on IDEAS
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    Cited by:

    1. Travis J. Lybbert & Bruce Wydick, 2017. "Hope as Aspirations, Agency, and Pathways: Poverty Dynamics and Microfinance in Oaxaca, Mexico," NBER Chapters, in: The Economics of Poverty Traps, pages 153-177, National Bureau of Economic Research, Inc.
    2. Ballet, Jérôme & Marchand, Lucile & Pelenc, Jérôme & Vos, Robin, 2018. "Capabilities, Identity, Aspirations and Ecosystem Services: An Integrated Framework," Ecological Economics, Elsevier, vol. 147(C), pages 21-28.
    3. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    4. Anandi Mani & Emma Riley, 2019. "Social networks, role models, peer effects, and aspirations," WIDER Working Paper Series wp-2019-120, World Institute for Development Economic Research (UNU-WIDER).
    5. Camacho, Carmen & Harmankaya, Fatih & Sağlam, Çağrı, 2020. "Social status pursuit, distribution of bequests and inequality," Economic Modelling, Elsevier, vol. 86(C), pages 183-191.
    6. Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2013. "Endogenous fiscal policies, environmental quality, and status-seeking behavior," Ecological Economics, Elsevier, vol. 88(C), pages 32-40.
    7. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," Working Papers halshs-00590436, HAL.
    8. Mekonnen, Daniel & Gerber, Nicolas, 2015. "The Effect of Aspirations on Agricultural Innovations in Rural Ethiopia," 2015 Conference, August 9-14, 2015, Milan, Italy 211680, International Association of Agricultural Economists.
    9. Isidro Soloaga & Alejandra Villegas & Raymundo Campos, 2022. "Aspirations, personal traits and neighborhood environment," Working Paper Series Sobre México 2022006, Sobre México. Temas en economía.
    10. Francesco Bogliacino & Pietro Ortoleva, 2014. "The Behavior of Others as a Reference Point," Working Papers 2014-4, Princeton University. Economics Department..
    11. Baochun Peng, 2008. "Relative deprivation, wealth inequality and economic growth," Journal of Economics, Springer, vol. 94(3), pages 223-229, September.
    12. Sung Soo Lim, 2020. "The Effects of Chronic Illness on Aspirations and Subjective Wellbeing," Journal of Happiness Studies, Springer, vol. 21(5), pages 1771-1793, June.
    13. Nan Zhao & Wanqing Liao & Jun Xia & Zizhe Zhang, 2023. "The effect of intergenerational mobility on family education investment: evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-12, December.

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    More about this item

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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