Modeling Luxury Consumption: An Inter-Income Classes Study of Demand Dynamics and Social Behaviors
In this paper we develop an agent-based model of conspicuous consumption built on well-established social behaviours. The process of preference formation, based on imitation and differentiation under cognitive limitations, endogenously generates class-specific consumption profiles. Considering consumption as competition among households to obtain social recognition, we find that low levels of 'social competition' increases individual well-being. Especially, the desire to imitate 'social models' of consumption appears as the main determinant of individual well-being dynamics. According to the model, public policies, when aiming to reduce income inequality, are efficient for increasing 'subjective well-being' in the economy, however, well-being improvements are low when demonstration effects and consumption standards are high.
|Date of creation:||Apr 2013|
|Date of revision:||May 2014|
|Contact details of provider:|| Postal: 250, rue Albert Einstein, 06560 Valbonne|
Web page: http://www.gredeg.cnrs.fr
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andreas Chai & Alessio Moneta, 2010. "Retrospectives: Engel Curves," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 225-240, Winter.
- Marco Valente, 2012. "Evolutionary demand: a model for boundedly rational consumers," Journal of Evolutionary Economics, Springer, vol. 22(5), pages 1029-1080, November.
When requesting a correction, please mention this item's handle: RePEc:gre:wpaper:2013-13. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patrice Bougette)
If references are entirely missing, you can add them using this form.