“Relative concerns for consumption at the top”: An intertemporal analysis for the UK

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu According to both our OLS and GMM estimates, for the population of non-rich individuals as a whole, there is no evidence of such relative concerns. These results are robust to alternative definitions of the reference group, the presence of exogenous effects and liquidity constraints, and the interval censoring nature of our food consumption data. However, we find some (correlational) evidence of heterogeneous effects across county and household characteristics, which is robust to simultaneous estimation. In particular, there are relative concerns (for consumption at the top) in counties with relatively low income inequality or relatively high population density. Households whose head has relatively low educational attainment are also subject to relative concerns for consumption at the top. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: D12, D91

Envy and Habits: Panel Data Estimates of Interdependent Preferences

“… These results are consistent with recent work by Quintana‐Domeque and Wohlfart () that using UK household data on food consumption find no evidence of relative concerns. …”

Social inclusion through social status and the emergence of development traps

“…Consistent with previous empirical and theoretical findings, the model suggests that increases in the mean income and reductions in inequality foster the competition for status by raising the cost of access to the reference group and increasing the mass of people who wants to stay with or join the relevant reference group. On one side, the effect of increases in the mean income captures the idea that the concerns for relative position become increasingly relevant as incomes rise so that social status, as a luxury good, becomes relatively more important with economic growth and/or in already rich countries (Clark et al, 2008; Heffetz & Frank, 2011; Quintana‐Domeque & Wohlfart, 2016). On the other side, greater equality stimulates the competition for status because it provides people stronger incentives to differentiate themselves (Hopkins & Kornienko, 2006; Jin et al, 2011; Quintana‐Domeque & Wohlfart, 2016).…”

“…On one side, the effect of increases in the mean income captures the idea that the concerns for relative position become increasingly relevant as incomes rise so that social status, as a luxury good, becomes relatively more important with economic growth and/or in already rich countries (Clark et al, 2008; Heffetz & Frank, 2011; Quintana‐Domeque & Wohlfart, 2016). On the other side, greater equality stimulates the competition for status because it provides people stronger incentives to differentiate themselves (Hopkins & Kornienko, 2006; Jin et al, 2011; Quintana‐Domeque & Wohlfart, 2016). Overall, as the competition for status strengthens, a larger mass of individuals spends an increasing share of their budget in the consumption of the social participation good to reach the benchmark level of the reference group.…”

A Class of Proximity-Sensitive Measures of Relative Deprivation

“…An assumption made in both theoretical and empirical writings that have incorporated relative deprivation is that comparisons with others who are positioned to the right of the individual in the income distribution count equally: the income excesses of those who are close by and the income excesses of those who are farther away are accorded equal importance. However recent evidence (Obloj and Zenger, 2015;Quintana-Domeque and Wohlfart, 2016) indicates that people attach different importance to changes in incomes of individuals who are farther away in the income distribution than to changes in incomes of adjacent individuals.…”