Article
Do the Joneses make you financially vulnerable?
Arthaniti: Journal of Economic Theory and Practice
Document Type
Article
Disciplines
Publication Version
Accepted Manuscript
Publication Date
12-1-2016
DOI
10.1177/0976747920160202
Abstract
This paper studies a model economy populated with agents of differing incomes that get a utility boost when their consumption keeps up with their neighbors, the proverbial Joneses. The resulting utility function is non-concave. In this setup, participation in a fair consumption lottery has the potential to make some agents ex-ante better off but more financially vulnerable. More people of different incomes join the lottery pool when the ‘kick’ from keeping up increases. Worsening income inequality may increase the number of financially vulnerable people. The analysis offers broad-brushstroke insights into the connection between inequality and financial vulnerability.
Copyright Owner
The Department of Economics, University of Calcutta
Copyright Date
2016
Language
en
File Format
application/pdf
Citation Information
Richard C. Barnett, Joydeep Bhattacharya and Helle Bunzel. "Do the Joneses make you financially vulnerable?" Arthaniti: Journal of Economic Theory and Practice Vol. 15 Iss. 2 (2016) p. 11 - 28 Available at: http://works.bepress.com/joydeep_bhattacharya/94/
This is a manuscript of an article published as Barnett, Richard C., Joydeep Bhattacharya, and Helle Bunzel. "Do the Joneses make you financially vulnerable?." Arthaniti-Journal of Economic Theory and Practice 15, no. 2 (2016): 11-28. doi:10.1177/0976747920160202. Posted with permission.