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Pré-publication, Document de travail Année : 2015

On the Equilibrium and Welfare Consequences of Keeping Up With The Joneses

Thérèse Rebière
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Résumé

This paper provides an analysis of the social consequences of people seeking to keep up with the Joneses. All individuals attempt to reach a higher rank than the Joneses, including the Joneses themselves. This attitude gives rise to an equilibrium in which all individuals have equal utilities but unequal (gross) incomes. Due to a rat-race effect, individuals devote too much energy to climbing the social scale in this equilibrium. However, laissez-faire equilibrium is an equal-utility constrained social optimum. Unexpectedly, numerical simulations show that this theory could account for the observed distribution of intermediate wages.
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Dates et versions

halshs-01158406, version 1 (01-06-2015)

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  • HAL Id : halshs-01158406 , version 1

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Frédéric Gavrel, Thérèse Rebière. On the Equilibrium and Welfare Consequences of Keeping Up With The Joneses. 2015. ⟨halshs-01158406⟩
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Dernière date de mise à jour le 28/04/2024
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