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How Much Do Others Matter? Explaining Positional Concerns for Different Goods and Personal Characteristics

  • Inga Hillesheim

    ()

  • Mario Mechtel

    ()

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

We test concerns for relative standing with respect to private consumption, income, leisure, savings, and personal characteristics, using data from a classroom survey. Our results show highest degrees of positionality for personal characteristics and income. In order to explain positionality, we employ survey participants’ ratings of items with respect to (i) observability and (ii) non-psychological negative externalities on others. Based on these ratings, our results show that non-psychological externalities play an important role for an item’s degree of positionality. In contrast to previous research, we find that there is no statistically significant effect of an item’s observability on its degree of positionality.

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Paper provided by Institute of Labour Law and Industrial Relations in the European Union (IAAEU) in its series IAAEU Discussion Papers with number 201210.

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Date of creation: Nov 2012
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Handle: RePEc:iaa:dpaper:201210
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  1. Postlewaite, Andrew, 1998. "The social basis of interdependent preferences," European Economic Review, Elsevier, vol. 42(3-5), pages 779-800, May.
  2. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2001. "How Much Do We Care About Absolute Versus Relative Income and Consumption?," Working Papers in Economics 63, University of Gothenburg, Department of Economics.
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  7. Mobius, Markus & Rosenblat, Tanya, 2010. "Why Beauty Matters," Staff General Research Papers 32112, Iowa State University, Department of Economics.
  8. Carlsson, Fredrik & Johansson-Stenman, Olof & Martinsson, Peter, 2003. "Do You Enjoy Having More Than Others? Survey Evidence of Positional Goods," Working Papers in Economics 100, University of Gothenburg, Department of Economics.
  9. Frank, Robert H., 2008. "Should public policy respond to positional externalities?," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1777-1786, August.
  10. Sara J. Solnick & David Hemenway, 2005. "Are Positional Concerns Stronger in Some Domains than in Others?," American Economic Review, American Economic Association, vol. 95(2), pages 147-151, May.
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  12. Ori Heffetz, 2011. "A Test of Conspicuous Consumption: Visibility and Income Elasticities," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1101-1117, November.
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  18. Rainer Winkelmann, 2011. "Conspicuous consumption and satisfaction," ECON - Working Papers 030, Department of Economics - University of Zurich.
  19. 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 Tuebingen Working Papers in Economics and Finance 4, University of Tuebingen, Faculty of Economics and Social Sciences.
  20. 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.
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  22. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  23. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, December.
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