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Relational consumption and nonlinear dynamics in an overlapping generations model

Author

Listed:
  • Antoci, Angelo

    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Sodini, Mauro

    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Zarri, Luca

    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

Abstract
In this paper, we show that incorporating the relational dimension into an otherwise standard OLG model and focusing on dynamic leisure externalities leads to dramatically different predictions. Here we show that when the old perceive private and relational consumption as substitutable goods, a series of interesting dynamic outcomes – such as local indeterminacy, non-linear phenomena (including chaotic dynamics) and even multiple equilibria with global indeterminacy – may arise. We also draw some welfare implications and relate them to the well-known “happiness paradox” arising within contemporary affluent societies.

Suggested Citation

  • Antoci, Angelo & Sodini, Mauro & Zarri, Luca, 2012. "Relational consumption and nonlinear dynamics in an overlapping generations model," AICCON Working Papers 103-2012, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    • Handle: RePEc:ris:aiccon:2012_103
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    References listed on IDEAS

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    More about this item

    Keywords

    overlapping generations framework; growth; leisure; relational goods; happiness paradox;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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