Consumption-Savings Decisions Under Upward-Looking Comparisons

Konferenzbeitrag

We demonstrate that upward-looking comparisons induce "keeping up with the richer Joneses"-behavior. Using data from the German Socio-Economic Panel, we estimate the effect of reference consumption, defined as the consumption level of all households who are perceived to be richer, on household savings and consumption. When controlling for own income as well as unobserved individual and local area heterogeneity, an increase in reference consumption of 100 euros leads to an increase in consumption of up to 23 euros depending on the household's position in the income distribution. Our findings suggest that changing income inequality can have significant macroeconomic effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2014: Evidenzbasierte Wirtschaftspolitik - Session: Income Distribution, Status Comparisons and the Current Account ; No. D08-V3

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Consumer Economics: Empirical Analysis ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmid, Kai Daniel ; Drechsel-Grau, Moritz
• Event: Veröffentlichung
• (who): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel und Hamburg
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/100627
• Last update: 10.03.2025, 11:44 AM CET