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Relative Consumption Concerns or Non-Monotonic Preferences?

Author

Listed:
  • Inga Hillesheim
  • Mario Mechtel

    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

Abstract

We conduct a classroom survey to investigate the willingness to sacrifice consumption in absolute terms in order to ascend above others in terms of consumption levels. In contrast to other studies using survey methodologies, participants are divided into a treatment and a control group. This allows us to distinguish whether choosing less in absolute terms is really induced by relative consumption concerns, or else by nonmonotonic preferences. We find that relative consumption concerns provide a good explanation for choosing less in the case of some goods, while this is not the case for a number of other goods.

Suggested Citation

  • Inga Hillesheim & Mario Mechtel, 2012. "Relative Consumption Concerns or Non-Monotonic Preferences?," IAAEU Discussion Papers 201201, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    • Handle: RePEc:iaa:dpaper:201201
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    References listed on IDEAS

    as
    1. Hillesheim, Inga & Mechtel, Mario, 2011. "What makes us want to have more than others? Explaining relative consumption effects of public and private goods," University of Tübingen Working Papers in Business and Economics 4, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    2. Solnick, Sara J. & Hong, Li & Hemenway, David, 2007. "Positional goods in the United States and China," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(4), pages 537-545, August.
    3. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2005. "How much do we care about absolute versus relative income and consumption?," Journal of Economic Behavior & Organization, Elsevier, vol. 56(3), pages 405-421, March.
    4. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-116, March.
    5. Fredrik Carlsson & Olof Johansson‐Stenman & Peter Martinsson, 2007. "Do You Enjoy Having More than Others? Survey Evidence of Positional Goods," Economica, London School of Economics and Political Science, vol. 74(296), pages 586-598, November.
    6. Carlsson, Fredrik & Qin, Ping, 2010. "It is better to be the head of a chicken than the tail of a phoenix: Concern for relative standing in rural China," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 180-186, April.
    7. Richard Zeckhauser (ed.), 1991. "Strategy and Choice," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262240335, December.
    8. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November.
    9. Olof Johansson-Stenman & Fredrik Carlsson & Dinky Daruvala, 2002. "Measuring Future Grandparents" Preferences for Equality and Relative Standing," Economic Journal, Royal Economic Society, vol. 112(479), pages 362-383, April.
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    Cited by:

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    More about this item

    Keywords

    status consumption; social status; behavioral economics; other-regarding preferences;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D10 - Microeconomics - - Household Behavior - - - General

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