Conspicuous Consumption, Conspicuous Health, and Optimal Taxation

Redzo Mujcic and Paul Frijters
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Redzo Mujcic: School of Economics, The University of Queensland, https://economics.uq.edu.au

No 483, Discussion Papers Series from University of Queensland, School of Economics

Abstract: We present a simple model of status-seeking over multiple socioeco- nomic domains by introducing the concept of conspicuous health as an argument in the utility function, in addition to the well-established conspicuous consumption term. We explore the implications of such a utility function for optimal income taxation, where we show an in- crease in concerns for conspicuous health to have an opposite effect on the marginal tax rate, compared to an increase in concerns for conspic- uous consumption. Using life satisfaction panel data from Australia, along with an improved measure of exogenous reference groups (that accounts for the ‘time era’ of respondents), we find evidence of a com- parison health effect.

Date: 2013-08-20
New Economics Papers: this item is included in nep-hea, nep-pbe and nep-upt
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Citations: View citations in EconPapers (2)

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Journal Article: Conspicuous consumption, conspicuous health, and optimal taxation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:483

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