Income Inequality and Status-Seeking

Marii Paskov, Klarita Gërxhani and Herman G. van de Werfhorst

INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

Abstract: The objective of this paper is to study status-seeking, defined as pursuit for elevated social status, and how it relates to income inequality. Based on the literature suggesting that in unequal societies people are more concerned about their position in the social hierarchy, we hypothesize that people will also be more eager to attain enhanced social status in the eyes of others. To test this hypothesis we use repeated cross-sectional micro data from the European Social Survey (ESS), which was collected biannually from 2002 to 2012, and use it in combination with income inequality data from the Eurostat. With this data we can complement existing studies by focusing on both between- and within country over-time variability in income inequality and status-seeking. We find evidence of a positive relationship between income inequality and status seeking. However, the relationship appears to be non-linear and characterized by an inverted U-shape instead. Moreover, the analysis reveals that the relationship between income inequality and status-seeking is stronger among lower social status groups than those higher up in status hierarchy. These findings have implications for the literature and foster us to re-consider theoretical claims suggesting a linear relationship between income inequality and psycho-social outcomes.

Pages: 24 pages
Date: 2015-12
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Persistent link: https://EconPapers.repec.org/RePEc:amz:wpaper:2015-03

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