Keeping up with the Joneses: who loses out?

    Research output: Working paperDiscussion paper

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    Abstract

    This paper investigates how well-being varies with individual wage rates when individuals care about relative consumption and so there are Veblen effects – Keeping up with the Joneses – leading individuals to over-work. In the case where individuals compare themselves with their peers – those with the same wage-rate - it is shown that Keeping up with the Joneses leads some individuals to work who otherwise would have chosen not to. Moreover for these individuals well-being is a decreasing function of the wage rate - contrary to standard theory. So those who are worst-off in society are no longer those on the lowest wage.
    Original languageEnglish
    PublisherUniversity of St Andrews
    Pages1-9
    Number of pages9
    Publication statusPublished - 20 Sept 2014

    Publication series

    NameSchool of Economics & Finance Discussion Paper
    PublisherUniversity of St Andrews
    No.1412
    ISSN (Print)0962-4031
    ISSN (Electronic)2055-303X

    Keywords

    • Veblen effects
    • Consumer behaviour
    • Nash equilibrium
    • Wages and well-being

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