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Conspicuous consumption and satisfaction

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  • Rainer Winkelmann

Abstract

Traditional tools of welfare economics identify the envy-related welfare loss from conspicuous consumption only under very strong assumptions. Measured income and life satisfaction offers an alternative for estimating such consumption externalities. The approach is developed in the context of luxury car consumption (Ferraris and Porsches) in Switzerland. Results from household panel data and fixed effects panel regressions suggest that the prevalence of luxury cars in the municipality of residence has a negative impact on own income satisfaction.

Suggested Citation

  • Rainer Winkelmann, 2011. "Conspicuous consumption and satisfaction," ECON - Working Papers 030, Department of Economics - University of Zurich.
  • Handle: RePEc:zur:econwp:030
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    More about this item

    Keywords

    Ferrari; Porsche; status; consumption externality; Swiss Household Panel;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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