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Relational Consumption and Nonlinear Dynamics in an Overlapping Generations Model

  • Angelo Antoci

    ()

    (University of Sassari)

  • Mauro Sodini

    ()

    (University of Pisa, Department of Statistics and Mathematics Applied to Economics)

  • Luca Zarri

    ()

    (Department of Economics (University of Verona))

In this paper, we show that incorporating the relational dimension into an otherwise standard OLG model and focusing on dynamic leisure externalities leads to dramatically different predictions. Here we show that when the old perceive private and relational consumption as substitutable goods, a series of interesting dynamic outcomes - such as local indeterminacy, non-linear phenomena (including chaotic dynamics) and even multiple equilibria with global indeterminacy - may arise. We also draw some welfare implications and relate them to the well-known ‘happiness paradox’ arising within contemporary affluent societies.

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Paper provided by University of Verona, Department of Economics in its series Working Papers with number 13/2012.

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Length: 25
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:ver:wpaper:13/2012
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  1. Duranton, Gilles, 2001. "Endogenous labor supply, growth and overlapping generations," Journal of Economic Behavior & Organization, Elsevier, vol. 44(3), pages 295-314, March.
  2. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2007. "Social capital accumulation and the evolution of social participation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(1), pages 128-143, February.
  3. Luigino Bruni & Luca Stanca, 2005. "Watching alone: Relational Goods, Television and Happiness," Working Papers 90, University of Milano-Bicocca, Department of Economics, revised Jun 2005.
  4. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  5. Angelo Antoci & Fabio Sabatini & Mauro Sodini, 2009. "The fragility of social capital," Department of Economics University of Siena 551, Department of Economics, University of Siena.
  6. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2011. "See you on Facebook! A framework for analyzing the role of computer-mediated interaction in the evolution of social capital," MPRA Paper 29998, University Library of Munich, Germany.
  7. Angelo Antoci & Fabio Sabatini & Mauro Sodini, 2010. "The Solaria Syndrome: Social Capital in a Growing Hyper-technological Economy," Department of Economics University of Siena 585, Department of Economics, University of Siena.
  8. Ennio Bilancini & Simone D’Alessandro, 2011. "Long-run Welfare under Externalities in Consumption, Leisure, and Production: A Case for Happy Degrowth vs. Unhappy Growth," Department of Economics 0667, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
  9. Stefano Bartolini & Ennio Bilancini & Maurizio Pugno, 2008. "Did the Decline in Social Capital Depress Americans’ Happiness?," Department of Economics University of Siena 540, Department of Economics, University of Siena.
  10. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," MPRA Paper 13750, University Library of Munich, Germany.
  11. Simone Borghesi & Alessandro Vercelli, 2007. "Happiness and health: two paradoxes," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 0108, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
  12. Angelo Antoci & Fabio Sabatini & Mauro Sodini, 2011. "Economic Growth, Technological Progress, and Social Capital: The Inverted U Hypothesis," EERI Research Paper Series EERI_RP_2011_07, Economics and Econometrics Research Institute (EERI), Brussels.
  13. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
  14. Jean-Michel Grandmont & P, A, Pintus & R, De Vilder, 1997. "Capital-Labor Substitution and Competitive Nonlinear Endogenous Business Cycles," Working Papers 97-28, Centre de Recherche en Economie et Statistique.
  15. Emanuela Randon & Luigino Bruni & Ahmad Naimzada, 2008. "Dynamics of relational goods," International Review of Economics, Springer, vol. 55(1), pages 113-125, April.
  16. Gomez Suarez, Manuel A., 2008. "Utility and production externalities, equilibrium efficiency and leisure specification," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1496-1519, December.
  17. Becchetti Leonardo & Pelloni Alessandra & Rossetti Fiammetta, 2008. "Relational goods, sociability, and happiness," wp.comunite 0039, Department of Communication, University of Teramo.
  18. Dora L. Costa & Matthew E. Kahn, 2003. "Understanding the American Decline in Social Capital, 1952--1998," Kyklos, Wiley Blackwell, vol. 56(1), pages 17-46, February.
  19. Pintea, Mihaela I., 2010. "Leisure externalities: Implications for growth and welfare," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1025-1040, December.
  20. Daniel S. Hamermesh, 2002. "Timing, togetherness and time windfalls," Journal of Population Economics, Springer, vol. 15(4), pages 601-623.
  21. Junxi Zhang, 1999. "Environmental sustainability, nonlinear dynamics and chaos," Economic Theory, Springer, vol. 14(2), pages 489-500.
  22. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2008. "Participation, growth and social poverty: social capital in a homogeneous society," MPRA Paper 13661, University Library of Munich, Germany.
  23. Gomes, Orlando, 2006. "Can social interaction contribute to explain business cycles?," MPRA Paper 2848, University Library of Munich, Germany.
  24. Jennifer Hunt, 1998. "Hours Reductions as Work-Sharing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 339-381.
  25. de Vilder, Robin, 1996. "Complicated Endogenous Business Cycles under Gross Substitutability," Journal of Economic Theory, Elsevier, vol. 71(2), pages 416-442, November.
  26. Mihaela Pintea, 2006. "Leisure Externalities: Implications for Growth and Welfare," Working Papers 0609, Florida International University, Department of Economics.
  27. Bartolini, Stefano & Bonatti, Luigi, 2007. "Endogenous growth, decline in social capital and expansion of market activities," MPRA Paper 3341, University Library of Munich, Germany.
  28. Bartolini, Stefano & Bonatti, Luigi, 2008. "Endogenous growth, decline in social capital and expansion of market activities," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 917-926, September.
  29. Graham, Liam & Oswald, Andrew J., 2010. "Hedonic capital, adaptation and resilience," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 372-384, November.
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