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Ordinal vs Cardinal Status: Two Examples

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  • Ennio Bilancini

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  • Leonardo Boncinelli

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Abstract

We demonstrate that in models where agents have concerns for status the model predictions can drastically change depending on whether status is modelled as an ordinal or cardinal magnitude. As a proof, we show that two well known theoretical findings are not robust to the substitution of ordinal status with cardinal status (Frank (1985)) and viceversa (Clark and Oswald (1998)).

Suggested Citation

  • Ennio Bilancini & Leonardo Boncinelli, 2007. "Ordinal vs Cardinal Status: Two Examples," Department of Economics University of Siena 512, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:512
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    References listed on IDEAS

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    1. Andrew E. Clark & David Masclet & Marie Claire Villeval, 2006. "Effort, revenu et rang. Une étude expérimentale," Revue économique, Presses de Sciences-Po, vol. 57(3), pages 635-643.
    2. 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.
    3. Cooper, Ben & Garcia-Penalosa, Cecilia & Funk, Peter, 2001. "Status Effects and Negative Utility Growth," Economic Journal, Royal Economic Society, vol. 111(473), pages 642-665, July.
    4. Samuel Bowles & Yongjin Park, 2005. "Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right?," Economic Journal, Royal Economic Society, vol. 115(507), pages 397-412, November.
    5. 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.
    6. Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, vol. 60(4), pages 837-857, July.
    7. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
    8. Veblen, Thorstein, 1899. "The Theory of the Leisure Class," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1899.
    9. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    10. Corneo, Giacomo & Jeanne, Olivier, 1998. "Social organization, status, and savings behavior," Journal of Public Economics, Elsevier, vol. 70(1), pages 37-51, October.
    11. Fershtman, Chaim & Murphy, Kevin M & Weiss, Yoram, 1996. "Social Status, Education, and Growth," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 108-132, February.
    12. H. Leibenstein, 1950. "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand," The Quarterly Journal of Economics, Oxford University Press, vol. 64(2), pages 183-207.
    13. Clark, Andrew E. & Oswald, Andrew J., 1998. "Comparison-concave utility and following behaviour in social and economic settings," Journal of Public Economics, Elsevier, vol. 70(1), pages 133-155, October.
    14. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-373, June.
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    Citations

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    Cited by:

    1. Bilancini, Ennio & Boncinelli, Leonardo, 2014. "Instrumental cardinal concerns for social status in two-sided matching with non-transferable utility," European Economic Review, Elsevier, vol. 67(C), pages 174-189.
    2. Christopher Tsoukis & Frédéric Tournemaine, 2013. "Status In A Canonical Macro Model: Labour Supply, Growth And Inequality," Manchester School, University of Manchester, vol. 81, pages 65-92, October.
    3. Gallice, Andrea, 2018. "Social status, preferences for redistribution and optimal taxation: A survey," Economics Discussion Papers 2018-31, Kiel Institute for the World Economy (IfW).
    4. Ferrari, Luca, 2018. "Social limits to redistribution and conspicuous norms," Economics Discussion Papers 2018-30, Kiel Institute for the World Economy (IfW).
    5. Harald W. Lang, 2016. "You Are Not Alone: Experimental Evidence on Risk Taking When Social Comparisons Matter," Working Papers tax-mpg-rps-2016-12, Max Planck Institute for Tax Law and Public Finance.
    6. repec:bla:econom:v:84:y:2017:i:336:p:647-666 is not listed on IDEAS
    7. Oded Stark, 2017. "Migration when Social Preferences are Ordinal: Steady-state Population Distribution and Social Welfare," Economica, London School of Economics and Political Science, vol. 84(336), pages 647-666, October.
    8. S. Wouters & N. Exel & M. Donk & K. Rohde & W. Brouwer, 2015. "Do people desire to be healthier than other people? A short note on positional concerns for health," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(1), pages 47-54, January.
    9. Bilancini, Ennio & D'Alessandro, Simone, 2012. "Long-run welfare under externalities in consumption, leisure, and production: A case for happy degrowth vs. unhappy growth," Ecological Economics, Elsevier, vol. 84(C), pages 194-205.
    10. Wai Chiu Woo, 2016. "Quantity versus variety: Which aspect does status-seeking promote?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(2), pages 93-106, June.
    11. Ennio Bilancini & Massimo D'Antoni, 2008. "Pensions and Intergenerational Risk-Sharing When Relative Consumption Matters," Department of Economics University of Siena 541, Department of Economics, University of Siena.
    12. Bilancini, Ennio & Boncinelli, Leonardo, 2012. "Redistribution and the notion of social status," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 651-657.

    More about this item

    Keywords

    Status; Social Comparison; Ordinality; Cardinality;

    JEL classification:

    • D0 - Microeconomics - - General

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