Choosing to keep up with the Joneses and income inequality

DOI10.1007/S00199-009-0494-5MaRDI QIDQ607480zbMATH OpenOpenAlexFDO

Authors Richard C. Barnett, Joydeep Bhattacharya, Helle Bunzel

Publication date 22 November 2010

Published in Economic Theory (Search for Journal in Brave)

Full work available at URL http://www2.econ.iastate.edu/papers/p1744-2008-01-10.pdf

zbMATH Keywords

income inequalitykeeping up with the Jonesesleisure distributionrat race

Mathematics Subject Classification ID

Dynamic stochastic general equilibrium theory (91B51) Special types of economic equilibria (91B52) Special types of economic markets (including Cournot, Bertrand) (91B54)

Review text

Consider an economy of heterogeneous agents. If an agent's utility depends on the consumption of another agent, then the agent is said to be in a rat race. This paper studies the equilibrium of such an economy, with the novel feature that an agent may elect to drop out of the rat race. The paper proves the existence of equilibrium, together with a partial characterization and a useful numerical example. Average consumption and average leisure are inversely related.

Recommendations

• The fight-or-flight response to the Joneses and inequality
• Wealth inequality under ``keeping up with the Joneses preferences
• Keeping up with the Joneses: who loses out?
• Higher tax and less work: reverse ``keep up with the Joneses and rising inequality
• GROWTH AND KEEPING UP WITH THE JONESES

Cites work

• Consumption externalities: a representative consumer model when agents are heterogeneous
• Growth and income inequality: a canonical model
• Income Distribution and Macroeconomics
• Lotteries, inequality, and market imperfection: Galor and Zeira go gambling
• Risk-Bearing and the Theory of Income Distribution
• Status-seeking behavior, the evolution of income inequality, and growth

Cited in

(13)

• Status, affluence, and inequality: rank-based comparisons in games of status
• Keeping up with the neighbors: social interaction in a production economy
• Aspirations, health and the cost of inequality
• Wealth inequality under ``keeping up with the Joneses preferences
• The fight-or-flight response to the Joneses and inequality
• Rank dynamics for functional data
• Keeping up with the Joneses: who loses out?
• GROWTH AND KEEPING UP WITH THE JONESES
• Growth and inequality: dependence on the time path of productivity increases (and other structural changes)
• Income distribution, consumer debt and keeping up with the Joneses
• Bivariate almost stochastic dominance
• The two sides of envy
• Higher tax and less work: reverse ``keep up with the Joneses and rising inequality

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