Status, endogenous reference standards, and the growth-inequality relation: A note
We develop an endogenous growth model with heterogeneous agents who care about their status in society. Following the social psychology literature, we formalise the idea that the reference standard to which people compare themselves is a choice variable. In such a framework, we analyse the determinants of the choice of the reference standard and their effects on growth and distribution. We show that low skilled individuals can end up with a higher level of income than high skilled individuals if their level of ambition is high enough. This is because what matters for the choice of reference standard and inequality is the combination of skills and ambitions of individuals. Moreover, as skills and ambitions affect positively growth, we find that growth and inequalities can be either negatively or positively correlated.
|Date of creation:||11 Sep 2008|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
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.:
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-1037, October.
- Futagami, Koichi & Shibata, Akihisa, 1998. "Keeping one step ahead of the Joneses: Status, the distribution of wealth, and long run growth," Journal of Economic Behavior & Organization, Elsevier, vol. 36(1), pages 109-126, July.
- Fershtman, C. & Murphy, K.M., 1993.
"Social Status, Education and Growth,"
8-93, Tel Aviv.
- Clark, Andrew E. & Oswald, Andrew J., 1996.
"Satisfaction and comparison income,"
Journal of Public Economics,
Elsevier, vol. 61(3), pages 359-381, September.
- Clark, Andrew E & Oswald, Andrew J, 1993. "Satisfaction and Comparison Income," Economics Discussion Papers 10018, University of Essex, Department of Economics.
- Clark, Andrew E. & Oswald, Andrew J., 1994. "Satisfaction and comparison income," CEPREMAP Working Papers (Couverture Orange) 9408, CEPREMAP.
- Frederic Tournemaine, 2008. "Social aspirations and choice of fertility: why can status motive reduce per-capita growth?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(1), pages 49-66, January.
- Persson, T. & Tabellini, G., 1993.
"Is Inequality Harmful for Growth,"
537, Stockholm - International Economic Studies.
- Walter Fisher & Franz Hof, 2000. "Relative consumption, economic growth, and taxation," Journal of Economics, Springer, vol. 72(3), pages 241-262, October.
- Klaus Deininger & Lyn Squire, 1996.
"A New Data Set Measuring Income Inequality,"
CEMA Working Papers
512, China Economics and Management Academy, Central University of Finance and Economics.
- Tournemaine, Frederic & Tsoukis, Christopher, 2008. "Relative consumption, relative wealth and growth," Economics Letters, Elsevier, vol. 100(2), pages 314-316, August.
- Falk, Armin & Knell, Markus, 2004.
"Choosing the Joneses: Endogenous Goals and Reference Standards,"
IZA Discussion Papers
1152, Institute for the Study of Labor (IZA).
- Armin Falk & Markus Knell, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 417-435, October.
- Falk, Armin & Knell, Markus, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," CEPR Discussion Papers 4459, C.E.P.R. Discussion Papers.
- Tournemaine, Frederic & Tsoukis, Christopher, 2010.
"Gain versus pain from status and ambition: Effects on growth and inequality,"
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics),
Elsevier, vol. 39(2), pages 286-294, April.
- Tournemaine, Frederic & Tsoukis, Christopher, 2008. "Gain versus pain from status and ambition: Effects on growth and inequality," MPRA Paper 8670, University Library of Munich, Germany.
- Ravallion, Martin & Shaohua Chen, 1996.
"What can new survey data tell us about recent changes in distribution and poverty?,"
Policy Research Working Paper Series
1694, The World Bank.
- Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-82, May.
- Chris Tsoukis, 2007. "Keeping Up With The Joneses, Growth, And Distribution," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(4), pages 575-600, 09.
- Partridge, Mark D, 1997. "Is Inequality Harmful for Growth? Comment," American Economic Review, American Economic Association, vol. 87(5), pages 1019-32, December.
- Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999.
"A Data Set on Income Distribution,"
CEMA Working Papers
575, China Economics and Management Academy, Central University of Finance and Economics.
- Corneo, Giacomo & Jeanne, Olivier, 1997. "On relative wealth effects and the optimality of growth," Economics Letters, Elsevier, vol. 54(1), pages 87-92, January.
- JÃ¼rgen Maurer & AndrÃ© Meier, 2008. "Smooth it Like the â€œJoneses?â€ Estimating Peer-Group Effects in Intertemporal Consumption Choice," MEA discussion paper series 08167, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Pham, Thi Kim Cuong, 2005. "Economic growth and status-seeking through personal wealth," European Journal of Political Economy, Elsevier, vol. 21(2), pages 407-427, June.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:10420. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.