Dynamic Status Effects, Savings, and Income Inequality

Dioikitopoulos, Evangelos V.; Turnovsky, Stephen J.; Wendner, Ronald

doi:10.2139/ssrn.3026997

Cited by 2 publications

(6 citation statements)

References 71 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…463ff) as well as Dioikitopoulos et al. (). We first determine the equilibrium dynamics of individual i 's share of total capital,

k_{i} false(t false)

.…”

Section: Income Taxation Public Investment and The Dynamics Of Wealmentioning

confidence: 86%

“…As described in more detail in Dioikitopoulos et al. (), if

\dot{k} > 0

, under Assumption 1.2, the status effect causes the optimal consumption growth rate to decline as a country develops. The intertemporal consumption decision is affected by the degree to which people evaluate their social status over time.…”

Section: The Modelmentioning

confidence: 98%

“…To illustrate how differences in status preferences between countries can account for the differential dynamics of wealth inequality, as observed in contemporary data (see Dioikitopoulos et al., ), we consider an increase in the income tax rate (associated with a rise in productive government spending). In doing so, differences in status preferences are reflected in different values of

E (c, k) \leq 0

, viewed as proxying cultural differences between countries.…”

Section: Income Taxation Public Investment and The Dynamics Of Wealmentioning

confidence: 99%

“…This mechanism is developed in detail in an earlier paper by Dioikitopoulos, Turnovsky, and Wendner (). We extend that paper in two important directions.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Public policy, dynamic status preferences, and wealth inequality

Dioikitopoulos

Turnovsky

Wendner

2018

J Public Economic Theory

Self Cite

View full text Add to dashboard Cite

This paper studies the effect of productive government spending (taxation) on aggregate savings behavior and its consequences for the dynamics of wealth inequality, taking into consideration key behavioral changes that occur during the process of economic development. Substantial empirical evidence suggests that during this process agents' preferences toward status (positional consumption) evolves according to the average wealth of the society. The sources of wealth include private capital and productive public capital, the latter financed by a distortionary income tax. This dynamic status effect impacts peoples' responses to tax policy in ways which contrast with those of the standard neoclassical model. Specifically, we find that in response to an increase in the income tax, in economies with a strong (weak) enough dynamic status effect, savings and inequality increase (decrease). Incorporating the behavioral changes to fiscal policy expands the set of mechanisms available to explain the observed variations of savings and wealth distribution dynamics that cannot be attributed to technological or other structural factors.

show abstract

“…463ff) as well as Dioikitopoulos et al. (). We first determine the equilibrium dynamics of individual i 's share of total capital,

k_{i} false(t false)

.…”

Section: Income Taxation Public Investment and The Dynamics Of Wealmentioning

confidence: 86%

“…As described in more detail in Dioikitopoulos et al. (), if

\dot{k} > 0

Section: The Modelmentioning

confidence: 98%

E (c, k) \leq 0

, viewed as proxying cultural differences between countries.…”

Section: Income Taxation Public Investment and The Dynamics Of Wealmentioning

confidence: 99%

“…This mechanism is developed in detail in an earlier paper by Dioikitopoulos, Turnovsky, and Wendner (). We extend that paper in two important directions.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Public policy, dynamic status preferences, and wealth inequality

Dioikitopoulos

Turnovsky

Wendner

2018

J Public Economic Theory

Self Cite

View full text Add to dashboard Cite

show abstract

“…Our work also builds upon the long standing literature on conspicuous consumption. 1 Specifically we extend the endogenous dynamic status preference model by Dioikitopoulos et al (2017Dioikitopoulos et al ( , 2018. We introduce two goods (low and high-calorie goods) and two types of individuals (poor and rich) in the model to describe individual food consumption behavior.…”

Section: Introductionmentioning

confidence: 99%

We are what we eat: Obesity, income, and social comparisons

Mathieu-Bolh

Wendner

2020

European Economic Review

Self Cite

View full text Add to dashboard Cite

The empirical evidence of a non-monotone relation between income and obesity is not well explained.We build a theoretical model combining income inequality and social comparisons to explain the link between income and obesity and study tax policy implications for fighting obesity. We assume that differences in food consumption patterns between poor and wealthy households partly reflect positionality, which is the concern for social status. Our key assumption is that positionality for low-calorie food consumption is positively related to a country's wealth. In this framework, body weight outcomes reflect competing income and positionality effects, yielding the following results. We explain the link between average obesity rates, and standards of living and suggest the existence of a Kuznets curve for obesity.For cross sections of the population, we explain the observed correlation between income and obesity, which is positive in poor countries, and negative rich countries. We find that increasing the relative cost of high-calorie food is less effective at decreasing the relative weight of poor individuals in rich countries than in poor countries.

show abstract

Dynamic Status Effects, Savings, and Income Inequality

Cited by 2 publications

References 71 publications

Public policy, dynamic status preferences, and wealth inequality

Public policy, dynamic status preferences, and wealth inequality

We are what we eat: Obesity, income, and social comparisons

Contact Info

Product

Resources

About