Abstract

http://ssrn.com/abstract=1146827
 
 

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Conspicuous Consumption, Human Capital and Poverty


Omer Moav


University of Warwick - Department of Economics; Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR)

Zvika Neeman


Tel Aviv University - Eitan Berglas School of Economics; Boston University - Department of Economics

June 2008

CEPR Discussion Paper No. DP6864

Abstract:     
Poor families around the world spend a large fraction of their income on consumption of goods that appear to be useless in alleviating poverty, while saving at very low rates and neglecting investment in health and education. Such consumption patterns seem to be related to the persistence of poverty. We offer an explanation for this observation, based on a trade-off between conspicuous consumption and human capital as signals for unobserved income, under the assumption that individuals care about their status. Despite homothetic preferences, this trade-off gives rise to a convex saving function, which can help explain the persistence of poverty.

Number of Pages in PDF File: 27

Keywords: Conspicuous Consumption, Human Capital, Poverty

JEL Classification: D91, O11, O12, O15

working papers series


Date posted: June 17, 2008  

Suggested Citation

Moav, Omer and Neeman, Zvika, Conspicuous Consumption, Human Capital and Poverty (June 2008). CEPR Discussion Paper No. DP6864. Available at SSRN: http://ssrn.com/abstract=1146827

Contact Information

Omer Moav (Contact Author)
University of Warwick - Department of Economics ( email )
Coventry CV4 7AL
United Kingdom
HOME PAGE: http://www2.warwick.ac.uk/fac/soc/economics/staff/academic/moav
Hebrew University of Jerusalem - Department of Economics ( email )
Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3121 (Phone)
+972 2 581 6071 (Fax)
HOME PAGE: http://economics.huji.ac.il/facultye/moav/moav.html
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Zvika Neeman
Tel Aviv University - Eitan Berglas School of Economics ( email )
P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
HOME PAGE: http://www.tau.ac.il/~zvika/
Boston University - Department of Economics ( email )
270 Bay State Road
Boston, MA 02215
United States
617-353-3184 (Phone)
617-353-4449 (Fax)
Feedback to SSRN


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References:  48
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