Consumption, Status and Redistribution
This paper considers the effect of inequality when there are concerns for status. We analyse the effects of linear redistributive taxes in an economy where agents' utility depends both on consumption and on their rank in the distribution of consumption of a positional good. This increase in equality increases the degree of social competition. The equilibrium level of expenditure on the positional good rises for most agents with the possible exception of some with above average income. Equilibrium utility falls for those with average and above income, while the utility of the poor may (or may not) rise.
|Date of creation:||Nov 2004|
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Web page: http://www.econ.ed.ac.uk/
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- Ed Hopkins & Tatiana Kornienko, 2002.
"Running to Keep in the Same Place: Consumer Choice as a Game of Status,"
ESE Discussion Papers
92, Edinburgh School of Economics, University of Edinburgh.
- Ed Hopkins & Tatiana Kornienko, 2004. "Running to Keep in the Same Place: Consumer Choice as a Game of Status," American Economic Review, American Economic Association, vol. 94(4), pages 1085-1107, September.
- Ed Hopkins & Tatiana Kornienko, 2004. "Status, Inequality and Growth," ESE Discussion Papers 123, Edinburgh School of Economics, University of Edinburgh.
- Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
- Hopkins, Ed & Kornienko, Tatiana, 2006.
"Inequality and growth in the presence of competition for status,"
Elsevier, vol. 93(2), pages 291-296, November.
- Ed Hopkins & Tatiana Kornienko, 2005. "Inequality and Growth in the Presence of Competition for Status," Levine's Bibliography 122247000000000554, UCLA Department of Economics.
- Bruno S. Frey & Alois Stutzer, 2002.
"What Can Economists Learn from Happiness Research?,"
Journal of Economic Literature,
American Economic Association, vol. 40(2), pages 402-435, June.
- Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
- Bruno S. Frey & Alois Stutzer, . "What can Economists Learn from Happiness Research?," IEW - Working Papers 080, Institute for Empirical Research in Economics - University of Zurich.
- Senik, Claudia, 2004. "When information dominates comparison: Learning from Russian subjective panel data," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2099-2123, August.
- Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, vol. 60(4), pages 837-57, July.
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