Car Ownership and Status
Erik Verhoef and
Bert van Wee
Additional contact information
Bert van Wee: RIVM/Utrecht University
No 00-076/3, Tinbergen Institute Discussion Papers from Tinbergen Institute
Abstract:
Research on 'happiness' suggests that once an average per capitaincome of around US$10,000 is achieved in acountry, further increases in income will not lead to a significantincrease in happiness. Additional income willprobably often be spent on the satisfaction of mainly 'relative'needs, of which 'status goods' would be oneexample. From that perspective, an overall shift to more fuel-efficient cars (i.e. smaller cars with less power) wouldnot necessarily, or only to a limited extent, result in lesshappiness. From a welfare economic perspective, thesatisfaction of the relative needs pertaining to consumption can beconsidered as a form of consumptionexternalities. This creates a welfare economic basis for governmentintervention. A model in which theseconsumption externalities are studied is presented here. Governmentintervention would include stimulatingconsumption of lower-status goods and discouraging consumption ofhigher-status ones. We speculate, however,that to achieve a significant increase in the fuel efficiency of acountry's car fleet through pricing policies, hugeprice increases may often be needed. As acceptance of price increasesas a policy instrument is often low, "fee-bates" and tradeable permits may be more preferable instruments.
Date: 2000-09-26
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
https://papers.tinbergen.nl/00076.pdf (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20000076
Access Statistics for this paper
More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().