Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101855
Authors: 
Jinkins, David
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8323
Abstract: 
I develop a model of conspicuous consumption to empirically measure the importance of peer beliefs to Americans and Chinese. In the model, a consumer cares not only about the direct utility she receives from consumption, but also about the way her consumption pattern affects her peer group's belief about her well-being. I estimate the model on household budget surveys. According to model estimates, a Chinese consumer cares 20% more than an American consumer about peer beliefs. The absolute size of the conspicuous consumption motive in both countries is relatively small. I use the estimated model to evaluate the welfare effect of the 1990-2002 American luxury tax on automobiles. The luxury tax benefited nearly all Americans a small amount, but hurt the small fraction of consumers who love automobiles the most.
Subjects: 
behavioral economics
conspicuous consumption
applied microeconomics
JEL: 
D12
Document Type: 
Working Paper

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