*Conspicuous Consumption, Inconspicuous Leisure

20 Pages Posted: 8 Oct 2009

See all articles by Kenneth J. Arrow

Kenneth J. Arrow

Stanford University - Department of Economics

Partha Dasgupta

University of Cambridge - Faculty of Economics and Politics; The Royal Swedish Academy of Sciences - Beijer International Institute of Ecological Economics

Date Written: 0000

Abstract

It is commonly argued that because relative consumption appears to matter to people, they must be involved in a ‘rat race’: people work harder and consume more than they would have were optimum public policies in place. But although consuming more today would improve one's relative consumption now, it would worsen one's relative consumption in the future. In this article we identify the structure of felicity functions for which the two effects offset each other exactly. The finding goes some way toward explaining why, while household surveys suggest that relative consumption matters, the consumption behaviour of households has not pointed unambiguously to the presence of relative consumption effects.

Suggested Citation

Arrow, Kenneth J. and Dasgupta, Partha, *Conspicuous Consumption, Inconspicuous Leisure (0000). The Economic Journal, Vol. 119, Issue 541, pp. F497-F516, November 2009. Available at SSRN: https://ssrn.com/abstract=1484214 or http://dx.doi.org/10.1111/j.1468-0297.2009.02318.x

Kenneth J. Arrow (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

Partha Dasgupta

University of Cambridge - Faculty of Economics and Politics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom

The Royal Swedish Academy of Sciences - Beijer International Institute of Ecological Economics

The Royal Swedish Academy of Sciences
P.O. Box 50005
S-104 05 Stockholm, SE-104 05
SWEDEN

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