Technological Advance, Social Fragmentation and Welfare

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 14042

Classification and Topics

• Classification: Wirtschaft ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Welfare Economics: Other ; Social Choice; Clubs; Committees; Associations ; Macro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy‡ ; Welfare, Well-Being, and Poverty: Other ; Technological Change: Choices and Consequences; Diffusion Processes ; Cultural Economics; Economic Sociology; Economic Anthropology: General
• Subject: conspicuous consumption ; bowling alone ; decoupling ; social fragmentation ; growth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bosworth, Steven J. ; Snower, Dennis J.
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/232794
• Last update: 10.03.2025, 11:42 AM CET