 Conspicuous consumption in the United States and ChinaJournal of Economic Behavior & Organization, 2016, vol. 127, issue C, 115-132 Abstract: How do differences in the motive for conspicuous consumption in the United States and China affect the incidence of taxes in those countries? In this paper I develop a model of conspicuous consumption in which a consumer cares not only about the direct utility she receives from consumption, but also about the way her consumption pattern affects her peer group's belief about her well-being. Estimating the model on American and Chinese data, I find that a Chinese consumer cares 20% more than an American consumer about peer beliefs. I use the estimated model in several experiments related to tax incidence. I find that the 1990–2002 American luxury tax on automobiles led to widespread but small welfare gains, and that the stronger Chinese motive for conspicuous consumption leads to fewer households harmed and larger median welfare gains from a 10% tobacco excise tax. Keywords: Conspicuous consumption; Demand system estimation; Tax incidence (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:127:y:2016:i:c:p:115-132 DOI: 10.1016/j.jebo.2016.03.018 Access Statistics for this article Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D. More articles in Journal of Economic Behavior & Organization from Elsevier |
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