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Why do people care about social status?

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  • Rege, Mari

Abstract

This paper shows that complementary interaction can induce people to care about social status because it serves as a signal of non-observable abilities. There is a unique separating equilibrium in which everyone cares about social status. In this equilibrium a person's social status perfectly reveals his abilities, and everyone matches with a person of like ability. The analysis shows that people's instrumental concern for social status has important welfare and policy implications. Indeed, peoples' efforts to "keep up with the Joneses" may be welfare enhancing.

Suggested Citation

  • Rege, Mari, 2008. "Why do people care about social status?," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 233-242, May.
  • Handle: RePEc:eee:jeborg:v:66:y:2008:i:2:p:233-242
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    References listed on IDEAS

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    Cited by:

    1. Ed Hopkins, 2012. "Job Market Signaling Of Relative Position, Or Becker Married To Spence," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 290-322, April.
    2. Mazali, Rogério & Rodrigues-Neto, José A., 2013. "Dress to impress: Brands as status symbols," Games and Economic Behavior, Elsevier, vol. 82(C), pages 103-131.
    3. repec:kap:enreec:v:67:y:2017:i:3:d:10.1007_s10640-017-0126-7 is not listed on IDEAS
    4. George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2017. "Premuneration Values and Investments in Matching Markets," Economic Journal, Royal Economic Society, vol. 127(604), pages 2041-2065, September.
    5. Larbi Alaoui & Alvaro Sandroni, 2013. "Predestination and the Protestant ethic," Economics Working Papers 1350, Department of Economics and Business, Universitat Pompeu Fabra.
    6. Bidner, Chris, 2010. "Pre-match investment with frictions," Games and Economic Behavior, Elsevier, vol. 68(1), pages 23-34, January.
    7. Mailath, George J. & Samuelson, Larry & Postlewaite, Andrew, 2013. "Pricing and investments in matching markets," Theoretical Economics, Econometric Society, vol. 8(2), May.
    8. Canoy, M. & in 't Veld, D., 2014. "How to boost the production of free services: In search of the holy referee grail," CeNDEF Working Papers 14-03, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    9. Streletskaya, Nadia A., 2016. "Social Presence and Shopping Behavior: Evidence from Video Data," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236571, Agricultural and Applied Economics Association.
    10. Mejía, Daniel & Restrepo, Pascual, 2016. "Crime and conspicuous consumption," Journal of Public Economics, Elsevier, pages 1-14.
    11. Friedrichsen, Jana & Engelmann, Dirk, 2013. "Who cares for social image? Interactions between intrinsic motivation and social image concerns," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79746, Verein für Socialpolitik / German Economic Association.
    12. Perez Truglia, Ricardo Nicolas, 2007. "Conspicuous consumption in the land of Prince Charming," MPRA Paper 22009, University Library of Munich, Germany, revised 22 Mar 2010.
    13. Gilat Levy & Ronny Razin, 2015. "Preferences over Equality in the Presence of Costly Income Sorting," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 308-337, May.
    14. Dreyer, Johannes K. & Schneider, Johannes & Smith, William T., 2013. "Saving-based asset-pricing," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3704-3715.
    15. Reif, Christiane & Rübbelke, Dirk & Löschel, Andreas, 2014. "Improving voluntary public good provision by a non-governmental, endogenous matching mechanism: Experimental evidence," CAWM Discussion Papers 73, University of Münster, Center of Applied Economic Research Münster (CAWM).
    16. Lombardo, Vincenzo, 2012. "Social inclusion and the emergence of development traps," MPRA Paper 36766, University Library of Munich, Germany.
    17. Larbi Alaoui & Alvaro Sandroni, 2013. "Predestination and the Protestant Ethic," Working Papers 679, Barcelona Graduate School of Economics.
    18. Alessandro Bucciol & Simona Cicognani & Luca Zarri, 2017. "The Status-Enhancing Power of Sociability," Working Paper series 17-15, Rimini Centre for Economic Analysis.
    19. Friedrichsen, Jana, 2013. "Image concerns and the provision of quality," Discussion Papers, Research Unit: Market Behavior SP II 2013-211, Social Science Research Center Berlin (WZB).
    20. Alessandro Bucciol & Simona Cicognani & Luca Zarri, 2017. "The Social Status-Enhancing Power of Social Ties," Working Papers 04/2017, University of Verona, Department of Economics.
    21. Canoy Marcel & Veld Daan L. in ’t, 2014. "How to Boost the Production of Free Services: In Search of the Holy Referee Grail," Man and the Economy, De Gruyter, vol. 1(1), pages 1-14, June.
    22. Matthias Greiff, 2015. "Integrating Affective Responses into Game Theory: A Dual Selves Model," MAGKS Papers on Economics 201517, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    23. repec:eee:touman:v:40:y:2014:i:c:p:193-202 is not listed on IDEAS
    24. repec:jed:journl:v:42:y:2017:i:4:p:95-118 is not listed on IDEAS
    25. Friedrichsen, Jana, 2016. "Signals sell: Designing a product line when consumers have social image concerns," Discussion Papers, Research Unit: Market Behavior SP II 2016-202, Social Science Research Center Berlin (WZB).

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