Comparing Consumption: A Curse or a Blessing?

Strulik, Holger

doi:10.2139/ssrn.1084882

Abstract

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Comparing Consumption: A Curse or a Blessing?

Holger Strulik

University of Goettingen (Gottingen) - School of Law, Economics, Social Sciences

August 2008

Leibniz Universitat Hannover Discussion Paper No. 382

Abstract:
Does it make us unhappier when we compare our current consumption with that of the Joneses or our own past achievements? This paper tries an answer without recurring on interpersonal utility comparisons. It calibrates an economy under three different assumptions, non-comparing utility, and inward-looking and outward-looking habit formation. Using consumption equivalents it then calculates how much individual welfare is affected in each economy by unexpected losses and gains of wealth.

Number of Pages in PDF File: 20

Keywords: habit formation, happiness, welfare, economic growth

JEL Classification: D60, D91, E21, O40

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Date posted: January 17, 2008 ; Last revised: September 3, 2008

Suggested Citation

Strulik, Holger, Comparing Consumption: A Curse or a Blessing? (August 2008). Leibniz Universitat Hannover Discussion Paper No. 382. Available at SSRN: http://ssrn.com/abstract=1084882 or http://dx.doi.org/10.2139/ssrn.1084882

Contact Information

Holger Strulik (Contact Author)

University of Goettingen (Gottingen) - School of Law, Economics, Social Sciences ( email )

Germany