Getting Ahead of the "Joneses": The Origin and Implications of Upward Comparison

Yiyi Li

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: People naturally tend to compare themselves to those who are better off. Yet up-ward comparison remains a puzzle since people generally dislike being worse off than others. This paper rationalizes upward comparison using a model in which individuals dislike lagging behind their comparison group but also prefer to affiliate with higher-status groups because doing so provides status benefits. The main results characterize who in the income distribution is more likely to compare upward. Individuals engage in upward comparison when the expected income of those below them exceeds a threshold relative to their own income. Moreover, everyone compares upward when there are sufficiently many people "close below" at every income level. Comparative statics with respect to the income distribution show that greater affluence or higher equality can lead individuals across the distribution to engage in more upward comparison. Surprisingly, a second-order stochastic shift in the income distribution reduces the utility of holding a fixed level of income at all income levels. This provides a mechanism through which higher affluence or lower inequality need not be associated with happiness.

Date: 2026-01-31
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