Do You Enjoy Having More than Others? Survey Evidence of Positional Goods

Abstract

Although conventional economic theory proposes that only the absolute levels of income and consumption matter for people's utility, there is much evidence that relative concerns are often important. This paper uses a choice experiment to measure people's perceptions of the degree to which such concerns matter, i.e. the degree of positionality. Based on a random sample in Sweden, income and cars are found to be highly positional, on average, in contrast to leisure and car safety. Leisure may even be completely non-positional. Potential policy implications are discussed. Copyright (c) The London School of Economics and Political Science 2007.

How much do others matter? Explaining positional concerns for different goods and personal characteristics

“…Whereas in previous research (Alpizar et al, 2005;Carlsson et al, 2007) items classified as easily observable turn out to have a higher degree of positionality, this is not the case in our survey, which relies on participants' perceptions of these attributes.…”

“…In contrast to other authors, who have already argued that observability (Alpizar et al, 2005;Carlsson et al, 2007) and non-psychological effects (Hillesheim and Mechtel, 2011) play a role regarding positionality, our classification of items' characteristics is based on the assessment of our survey participants. Besides not having to rely on our own evaluation of items' characteristics, this approach offers another important advantage: we can directly use a participant's rating to explain the participant's individual answers which allows for an analysis on the micro-level.…”

“…Recent papers have restricted their analysis to two or three different types of items. Comparisons are made, for example, between personal characteristics and income (Solnick and Hemenway, 1998), private and public goods (Solnick and Hemenway, 2005), private consumption and leisure activity (Alpizar et al, 2005), or income, leisure, and private consumption (Carlsson et al, 2007). By introducing two questions regarding private pension schemes and interest-paying investments, we fill the gap with respect to savings.…”

“…In recent years, a number of scholars have investigated individual concerns for relative standing with respect to different goods and personal attributes using survey data (see Hemenway, 1998, 2005;Johansson-Stenman et al, 2002;Alpizar et al, 2005;Solnick et al, 2007;Carlsson et al, 2007;Carlsson and Qin, 2010;Mechtel, 2011, 2012). These papers examine whether participants are willing to sacrifice consumption in absolute terms in order to advance their consumption rank in comparison to others.…”

Veblen’s theory of the leisure class revisited: implications for optimal income taxation

“…2 Yet, and somewhat paradoxically given the title and content of Veblen's book, almost the entire literature dealing with optimal tax and expenditure responses to relative consumption comparisons has ignored the role of leisure in such comparisons. 1 This empirical evidence includes happiness research (e.g., Easterlin 2001; Blanchflower and Oswald 2004;Ferrer-i-Carbonell 2005;Luttmer 2005;Clark and Senik 2010), questionnaire-based experiments (e.g., Johansson-Stenman et al 2002;Solnick and Hemenway 2005;Carlsson et al 2007;Corazzini, Esposito and Majorano, forthcoming), and, more recently, brain science (Fliessbach et al 2007;Dohmen et al forthcoming). There are also recent evolutionary models consistent with relative consumption concerns (Samuelson 2004;Rayo and Becker 2007).…”