Genuine Saving and Conspicuous Consumption

Thomas Aronsson () and Olof Johansson-Stenman ()
Additional contact information
Thomas Aronsson: Department of Economics, Umeå School of Business and Economics, Umeå University,, Postal: SE – 901 87 Umeå, Sweden.

No 641, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Much evidence suggests that people are concerned with their relative consumption, i.e., their own consumption relative to that of others. Yet, conspicuous consumption and the corresponding social costs have so far been ignored in savings-based indicators of sustainable development. The present paper examines the implications of relative consumption concerns for measures of sustainable development by deriving analogues to genuine saving when people are concerned with their relative consumption. Unless the positional externalities have been fully internalized, an indicator of such externalities must be added to genuine saving to arrive at the proper measure of intertemporal welfare change. A numerical example based on U.S. and Swedish data suggests that conventional measures of genuine saving (which do not reflect conspicuous consumption) are likely to largely overestimate this welfare change. We also show how relative consumption concerns affect the way public investment ought to be reflected in genuine saving.

Keywords: Welfare change; investment; saving; relative consumption (search for similar items in EconPapers)
JEL-codes: D03 D60 D62 E21 H21 I31 Q56 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2016-01
New Economics Papers: this item is included in nep-ltv and nep-mac
Note: This is an updated and modified version of a working paper from (2014) with the same title (No 605).
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/2077/41461 (text/html)

Related works:
Working Paper: Genuine Saving and Conspicuous Consumption (2014)
Working Paper: Genuine Saving and Conspicuous Consumption (2014)
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:hhs:gunwpe:0641

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers in Economics from University of Gothenburg, Department of Economics Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Jessica Oscarsson ().