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Gambling to Leapfrog in Status?

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  • Tim Friehe
  • Mario Mechtel

Abstract

This paper shows that households with positional concerns and convex status utility use gambling to attempt leapfrogging in the social hierarchy. We test this theoretical prediction relying on household data that is representative for Germany, proxying the status orientation of households by their expenditures for conspicuous consumption. Our empirical results strongly indicate that households who care about status are more likely to participate in gambling and invest more in gambling, while they save less. In addition, results regarding socio-economic and demographic characteristics are reported. For example, we find that households in East Germany are less likely to gamble and expend smaller amounts on gambling.

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  • Tim Friehe & Mario Mechtel, 2013. "Gambling to Leapfrog in Status?," CESifo Working Paper Series 4174, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4174
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    Cited by:

    1. Tim Friehe & Mario Mechtel & Markus Pannenberg, 2014. "Positional Income Concerns: Prevalence and Relationship with Personality and Economic Preferences," IAAEU Discussion Papers 201411, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

    More about this item

    Keywords

    conspicuous consumption; status-seeking; relative income; gambling behavior; behavioral economics;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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