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Conspicuous Consumption and Satisfaction


Rainer Winkelmann


University of Zurich - Statistics and Empirical Economic Research; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)
September 1, 2011


Abstract:     
Traditional tools of welfare economics identify the envy-related welfare loss from conspicuous consumption only under very strong assumptions. Measured income and life satisfaction offers an alternative for estimating such consumption externalities. The approach is developed in the context of luxury car consumption (Ferraris and Porsches) in Switzerland. Results from household panel data and fixed effects panel regressions suggest that the prevalence of luxury cars in the municipality of residence has a negative impact on own income satisfaction.

Number of Pages in PDF File: 28

Keywords: Ferrari, Porsche, status, consumption externality, Swiss household panel

JEL Classification: D12, D62, I31

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Date posted: November 9, 2011 ; Last revised: March 8, 2012

Suggested Citation

Winkelmann, Rainer, Conspicuous Consumption and Satisfaction (September 1, 2011). Available at SSRN: http://ssrn.com/abstract=1957046 or http://dx.doi.org/10.2139/ssrn.1957046

Contact Information

Rainer Winkelmann (Contact Author)
University of Zurich - Statistics and Empirical Economic Research ( email )
Raemistrasse 62
CH-8001 Zurich
Switzerland
++41 1 634 2292 (Phone)
++41 1 634 4996 (Fax)
HOME PAGE: http://www.unizh.ch/sts/
Institute for the Study of Labor (IZA) ( email )
P.O. Box 7240
Bonn, D-53072
Germany
+49 228 3894 503 (Phone)
+49 228 3894 510 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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