ENVY, LEISURE, AND RESTRICTIONS ON WORKING HOURS

Francisco Alvarez-Cuadrado ()

Departmental Working Papers from McGill University, Department of Economics

Abstract: We present a simple model of capital accumulation where agents care about their consumption relative to the consumption of other members of society. This concern with "envy" captures the intuition behind the growing body of empirical evidence that places interpersonal comparisons as a key determinant of well-being. In this context we quantify the extent of the distortions and welfare costs associated with envy. Under conservative estimates of envy we find that the implied welfare losses are substantial. Our analysis explores the implications of alternative policy arrangements designed to minimize the effects of the consumption externality. Our results suggest that if the optimal tax policy is not politically feasible restrictions on working hours provide an alternative tool to induce a market outcome that resembles the efficient allocation achieved under a benevolent central planner.

JEL-codes: D62 H21 H23 J22 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2006-08
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.mcgill.ca/files/economics/envyleasureand.pdf (application/pdf)

Related works:
Journal Article: Envy, leisure, and restrictions on working hours (2007)
Journal Article: Envy, leisure, and restrictions on working hours (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:mcl:mclwop:2006-01

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