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Income-comparison Attitudes in the US and the UK: Evidence from Discrete-choice Experiments

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  • Hitoshi Shigeoka
  • Katsunori Yamada

Abstract

Economists have long been aware of utility externalities such as a tendency to compare own income with others'. If welfare losses from income comparisons are significant, any governmental interventions that alter such attitudes may have large welfare consequences. We conduct an original online survey of discrete-choice questions to estimate such attitudes in the US and the UK. We find that the UK respondents compare incomes more than US respondents do. We then manipulate our respondents with simple information to examine whether the attitudes can be altered. Our information treatment suggesting that comparing income with others may diminish welfare even when income levels increase makes UK respondents compare incomes more rather than less. Interestingly, US respondents are not affected at all. The mechanism behind the UK results seems to be that our treatment gives moral license to make income comparisons by providing information that others do so.

Suggested Citation

  • Hitoshi Shigeoka & Katsunori Yamada, 2015. "Income-comparison Attitudes in the US and the UK: Evidence from Discrete-choice Experiments," ISER Discussion Paper 0930r, Institute of Social and Economic Research, Osaka University, revised Feb 2016.
    • Handle: RePEc:dpr:wpaper:0930r
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    References listed on IDEAS

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    1. Abel, Andrew B, 1990. "Asset Prices under Habit Formation and Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 80(2), pages 38-42, May.
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    5. Gali, Jordi, 1994. "Keeping Up with the Joneses: Consumption Externalities, Portfolio Choice, and Asset Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(1), pages 1-8, February.
    6. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D., 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, January.
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    Cited by:

    1. Nicolas L. Bottan & Ricardo Perez-Truglia, 2022. "Choosing Your Pond: Location Choices and Relative Income," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1010-1027, December.

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    More about this item

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D1 - Microeconomics - - Household Behavior
    • D3 - Microeconomics - - Distribution

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