Do consumption expenditures depend on the household’s relative position in the income distribution?

Abstract

Even though the permanent income and relative income hypotheses have been introduced in past research to explain consumer behaviour, no previous attempt was undertaken to integrate them in one model. In this article, the hypotheses were synthesized into a single model. The model was empirically tested using data from the 1996 Canadian Family Expenditure Survey. The results indicate that household consumption behaviour is generally explained by both hypotheses when integrated into one model, contrary to previously treating them as mutually exclusive hypotheses.

Household Consumption, Household Indebtedness, and Inequality in Turkey: A Microeconometric Analysis

“…We define two relative income indicators. Following Kosicki (1987), Abdel-Ghany, Silver, andGehlken (2002), and Sun and Wang (2012) our first indicator is standardized rank (Rank) defined as below:…”

Positional concern, gender, and household expenditures: a case study in Yunnan province

“…Positional concern for income could affect individuals’ or households’ expenditures on various goods with varying degrees of visibility or positionality (Veblen, 1898; Duesenberry, 1949). In order to pursue higher social status or to “keep up with the Joneses,” individuals or households tend to over-consume some types of visible or positional goods that have strong demonstration effects (Hirsch, 1976; Frank, 1985a, b; Abdel-Ghany et al , 2002; Charles et al , 2009; Levine et al , 2010; Brown et al , 2011; Heffetz, 2011; Jin et al , 2011; Sun and Wang, 2013). Alpizar et al (2005) investigated individual concern for both relative income and relative consumption.…”