The Taste for Status in International Comparison

This paper provides the first comparative analysis of the preference for social status across countries. We develop and provide support for two hypotheses: the cultural foundations hypothesis, which claims that individuals’ preferences for status are rooted in persistent cultural values, and the standard of living hypothesis, which states that in more developed economies, relative income matters more and absolute income matters less to individual utility. To investigate these hypotheses, we propose a theoretically grounded measure of the taste for status, the marginal rate of substitution of relative for absolute income. We find empirical support both of these hypotheses. Specifically, we find that the taste for status is positively associated with individualism, egalitarianism and per capita income. We also identify and provide evidence regarding two threshold values of the taste for status, which are associated with the onset of status preferences and with the emergence of an hedonic treadmill. Our estimates indicate that most countries fall between these two thresholds, and thus experience a positive taste for social status. Only the poorest and most hierarchical and collectivist countries fall below the threshold for a taste for status, and only the richest and most individualist and egalitarian countries experience an hedonic treadmill.