Growth and Employment in Europe: Sustainability and Competitiveness, Department of Economics, WU (Wirtschaftsuniversität Wien)
Competitive Conspicuous Consumption, Household Saving and Income inequality
Abstract: An intertemporal decision model is presented in which
subjects save less for retirement than the permanent income hypothesis
predicts, signaling optimistic income prospects (and therefore high latent
productivity) to possible partners in productive exchanges. Competitive
conspicuous consumption (CCC), as it is called, is a self-defeating
strategy, if followed by subjects simultaneously. Egalitarian policies
(which have to be distinguished from pure welfare policies) tend to lower
excess consumption. The CCC-hypothesis justifies a cross-sectional
Keynesian consumption function with declining marginal propensities to
consume. It is argued that the cultural context is highly relevant to the
scope and importance of CCC.
JEL-Codes: D9,; E2; (follow links to similar papers)
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design Joakim Ekebom