Interdependent Preferences and Aggregate Saving

Alexis Direr

Annals of Economics and Statistics, 2001, issue 63-64, 297-308

Abstract: The effect of relative consumption on aggregate saving is analyzed in a two-period model. It is assumed that people care about their rank in the consumption distribution at each date. It is shown that individuals concentrate their consumption in the period in which the distribution of consumption is the most egalitarian. As a result, a rise in consumption inequalities has a negative impact on saving compared to the case without a status-seeking motive.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2001:i:63-64:p:297-308

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