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Growth impact of status seeking behavior: A counter example

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  • Hamid Beladi
  • Sugata Marjit
  • Koushik Kumar Hati

Abstract

This paper analyzes the impact of status seeking behavior on the growth of income. Conventional wisdom suggests that such behavior should stimulate the growth rate. We introduce a general status indicator as an average of relative income and another that reflects relative expenditure on a status good in a simple dynamic model. We show that the conventional approach, which includes only concern for relative income, matters for growth. Otherwise, higher relative expenditure on a status good does not have any additional impact on optimal growth beyond the golden rule. Thus, the accepted wisdom that relative status concern always stimulates incentive for growth is called into question and provides fresh policy perspective.

Suggested Citation

  • Hamid Beladi & Sugata Marjit & Koushik Kumar Hati, 2024. "Growth impact of status seeking behavior: A counter example," Economics and Politics, Wiley Blackwell, vol. 36(1), pages 398-406, March.
    • Handle: RePEc:bla:ecopol:v:36:y:2024:i:1:p:398-406
    DOI: 10.1111/ecpo.12257
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    References listed on IDEAS

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