Keeping Up with the Joneses: Who Loses Out?

David Ulph

No 2015-14, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: This paper investigates how well-being varies with individual wage rates when individuals care about relative consumption and so there are Veblen effects - Keeping up with the Joneses - leading individuals to over-work. In the case where individuals compare themselves with their peers - those with the same wage-rate - it is shown that Keeping up with the Joneses leads some individuals to work who otherwise would have chosen not to. Moreover for these individuals well-being is a decreasing function of the wage rate - contrary to standard theory. So those who are worst-off in society are no longer those on the lowest wage.

Keywords: Veblen Effects; consumer behaviour; Nash equilibrium; wages and wellbeing (search for similar items in EconPapers)
Date: 2014-10
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Citations: View citations in EconPapers (13)

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