Conspicuous Consumption and Satisfaction

28 Pages Posted: 9 Nov 2011 Last revised: 8 Mar 2012

See all articles by Rainer Winkelmann

Rainer Winkelmann

University of Zurich - Statistics and Empirical Economic Research; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Date Written: 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.

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

JEL Classification: D12, D62, I31

Suggested Citation

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

Rainer Winkelmann (Contact Author)

University of Zurich - Statistics and Empirical Economic Research ( email )

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Centre for Economic Policy Research (CEPR)

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