Technological advance, social fragmentation and welfare

Steven Bosworth and Dennis J. Snower

No 2177, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper models the welfare consequences of social fragmentation arising from technological advance. We start from the premise that technological progress falls primarily on market-traded commodities rather than prosocial relationships, since the latter intrinsically require the expenditure of time and thus are less amenable to productivity increases. Since prosocial relationships require individuals to identify with others in their social group whereas marketable commodities are commonly the objects of social status comparisons, a tradeoff arises between in-group affiliation and inter-group status comparisons. People consequently narrow the bounds of their social groups, reducing their prosocial relationships and extending their status-seeking activities. As prosocial relationships generate positive externalities whereas status-seeking activities generate negative preference externalities, technological advance may lead to a particular type of "decoupling" of social welfare from material prosperity. Once the share of status goods in total production exceeds a crucial threshold, technological advance is shown to be welfare-reducing.

JEL-codes: D63 D69 D71 E71 I39 O33 Z10 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ltv and nep-soc
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https://www.econstor.eu/bitstream/10419/229166/1/1746391901.pdf (application/pdf)

Related works:
Journal Article: Technological advance, social fragmentation and welfare (2024)
Working Paper: Technological Advance, Social Fragmentation and Welfare (2021)
Working Paper: Technological Advance, Social Fragmentation and Welfare (2021)
Working Paper: Technological Advance, Social Fragmentation and Welfare (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:2177

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