How status concerns can make us rich and happy

Arbeitspapier

This paper considers an overlapping generations model of economic growth populated by two types of individuals. Competitive types compare future consumption (i.e. wealth) with the mean. Self-sufficient types derive utility simply from their own consumption and do not compare themselves with others. I derive a condition under which the utility (happiness) of both types increases when the economy is populated by a larger share of competitive types. In the long-run the condition is always fulfilled when the economy is capable of economic growth. The reason for this phenomenon is that competitive types generate higher savings and thus higher aggregate capital stock and income per capita, which raises utility of both types. I show that the result is robust to the consideration of endogenous work effort and that a sufficiently high share of competitive types in a society can be inevitable for long-run economic growth to exist.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 170

Classification and Topics

• Classification: Wirtschaft ; Micro-Based Behavioral Economics: General‡ ; Macroeconomics: Consumption; Saving; Wealth ; Economic Growth and Aggregate Productivity: General
• Subject: status preferences ; happiness ; economic growth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Strulik, Holger
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/80432
• Last update: 10.03.2025, 11:42 AM CET