Conspicuous consumption, conspicuous health, and optimal taxation

Mujcic, Redzo and Frijters, Paul (2015) Conspicuous consumption, conspicuous health, and optimal taxation. Journal of Economic Behavior and Organization, 111 59-70. doi:10.1016/j.jebo.2014.12.017


Author Mujcic, Redzo
Frijters, Paul
Title Conspicuous consumption, conspicuous health, and optimal taxation
Journal name Journal of Economic Behavior and Organization   Check publisher's open access policy
ISSN 0167-2681
Publication date 2015-03
Year available 2015
Sub-type Article (original research)
DOI 10.1016/j.jebo.2014.12.017
Open Access Status
Volume 111
Start page 59
End page 70
Total pages 12
Place of publication Netherlands
Publisher Elsevier
Collection year 2016
Language eng
Abstract We present a simple model of status-seeking over multiple socioeconomic domains by introducing the concept of conspicuous health as an argument in the utility function, in addition to the well-established conspicuous consumption term. We explore the implications of such a utility function for optimal non-linear taxation, where an increase in concerns for conspicuous health has an opposite effect on the marginal tax rate, compared to an increase in concerns for conspicuous consumption. Using life satisfaction panel data from Australia, along with an improved measure of exogenous reference groups (that accounts for the ‘time era’ of respondents), we find empirical evidence of a comparison health effect.
Keyword Simultaneous status races
Conspicuous health
Optimal taxation
Subjective well-being
Exogenous reference groups
Panel data
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2016 Collection
School of Economics Publications
 
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