Status concerns, inequality, and growth

Abstract

This chapter explores the relationship between status concerns and growth. Social status is a good which is always in fixed supply, even in a growing economy. Thus, on the one hand, it is interesting to examine how competition among individuals over this scarce good affects people’s wellbeing in the developed world (i.e. in economies where the ‘basic needs’ are satisfied) as the economy grows. On the other hand, one would like to know how the growth rate of the economy is affected by status-seeking.