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 language | English |
|---|---|
| Publisher | University of St Andrews |
| Pages | 1-9 |
| Number of pages | 9 |
| Publication status | Published - 20 Sept 2014 |
Publication series
| Name | School of Economics & Finance Discussion Paper |
|---|---|
| Publisher | University of St Andrews |
| No. | 1412 |
| ISSN (Print) | 0962-4031 |
| ISSN (Electronic) | 2055-303X |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 12 Responsible Consumption and Production
Keywords
- Veblen effects
- Consumer behaviour
- Nash equilibrium
- Wages and well-being
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