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Relative wealth, status-seeking, and catching-up

  • Van Long, Ngo
  • Shimomura, Koji

We show that, if relative wealth appears in the utility function, for example due to status seeking, then under certain conditions on the curvature of the utility function and the production function, the poor will eventually catch up with the rich. We give sufficient conditions for the final distribution of wealth to be independent of the initial distribution, and conditions for saddlepoint stability in a two-class model. Nous démontrons que si l'utilité est une fonction de la richesse relative, peut-être à cause de la recherche du standing, alors, sous certaines hypothèses concernant la courbature de la fonction d'utilité et de la fonction de production, les gens pauvres peuvent rattraper les gens riches. Nous donnons des conditions suffisantes pour que la distribution de richesse finale soit indépendante de la distribution initiale, ainsi que les conditions suffisantes pour la stabilité au sens du point de selle.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 53 (2004)
Issue (Month): 4 (April)
Pages: 529-542

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Handle: RePEc:eee:jeborg:v:53:y:2004:i:4:p:529-542
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  1. Nathalie de Marcellis-Warin & Erwann Michel-Kerjan, 2001. "The Public-Private Sector Risk-Sharing in the French Insurance "Cat. Nat. System"""," CIRANO Working Papers 2001s-60, CIRANO.
  2. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  3. Akerlof, George A, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 599-617, November.
  4. Konrad, Kai A., 1992. "Wealth seeking reconsidered," Journal of Economic Behavior & Organization, Elsevier, vol. 18(2), pages 215-227, July.
  5. Peter Christoffersen & Eric Ghysels & Norman R. Swanson, . "Let's Get "Real" about Using Economic Data," EPRU Working Paper Series 01-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  6. John M. Maheu & Thomas H. McCurdy, 2001. "Nonlinear Features of Realized FX Volatility," CIRANO Working Papers 2001s-42, CIRANO.
  7. Stiglitz, Joseph E, 1969. "Distribution of Income and Wealth among Individuals," Econometrica, Econometric Society, vol. 37(3), pages 382-97, July.
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