Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34161 
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers No. 2658
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Models of status based on Frank's (1985) count of the number of people with lower conspicuous consumption are inconsistent with the extensive empirical literature on happiness and well-being. The alternative approach to consumption interaction which uses some form of relative income has been developed in various contexts. These predict that a representative agent's well-being will increase with real income or consumption. However, this is again inconsistent with the time-series evidence for advanced economies. In this paper we combine a simple model of relative income with a distribution of ability that correctly predicts both time series results of near constant utility, and the positive, concave cross-sectional relation between income, working time and happiness
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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