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Well‐being and Affluence in the Presence of a Veblen Good

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  • B. Curtis Eaton
  • Mukesh Eswaran
Abstract
The happiness literature has established that, in the developed countries, increasing affluence has not increased well‐being in recent decades. We seek an explanation for this in terms of conspicuous consumption, a phenomenon originally identified by Veblen. We develop some simple general equilibrium models that incorporate a Veblen good, among others. In all of our models, as productivity increases, the Veblen good eventually dominates the economy in the sense that, by reducing leisure, more than all the added productivity is dissipated in the production of this good. Also, in the presence of a Veblen good, productivity increases destroy social capital.

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  • B. Curtis Eaton & Mukesh Eswaran, 2009. "Well‐being and Affluence in the Presence of a Veblen Good," Economic Journal, Royal Economic Society, vol. 119(539), pages 1088-1104, July.
    • Handle: RePEc:wly:econjl:v:119:y:2009:i:539:p:1088-1104
    DOI: 10.1111/j.1468-0297.2009.02255.x
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    Cited by:

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    3. Qiao, Kunyuan & Dowell, Glen, 2022. "Environmental concerns, income inequality, and purchase of environmentally-friendly products: A longitudinal study of U.S. counties (2010-2017)," Research Policy, Elsevier, vol. 51(4).
    4. Ioana CIORBAGIU, 2021. "Influences and spatial effects on subjective well-being," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(626), S), pages 23-42, Spring.
    5. Michael D. Carr & Arjun Jayadev, 2013. "Relative Income and Indebtedness: Evidence from Panel Data," Working Papers 2013_02, University of Massachusetts Boston, Economics Department.
    6. Manel Baucells & Rakesh K. Sarin, 2013. "Determinants of Experienced Utility: Laws and Implications," Decision Analysis, INFORMS, vol. 10(2), pages 135-151, June.
    7. Eaton, B. Curtis & Matheson, Jesse A., 2013. "Resource allocation, affluence and deadweight loss when relative consumption matters," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 159-178.
    8. Michael D. Carr & Arjun Jayadev, 2015. "Relative Income and Indebtedness: Evidence from Panel Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(4), pages 759-772, December.
    9. Policardo, Laura & Sanchez Carrera, Edgar J., 2024. "Wealth inequality and economic growth: Evidence from the US and France," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).

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