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Pride and Diversity in Social Economies †

Pride and Diversity in Social Economies † Abstract We study a two-period economy in which agents' preferences take into account their relative economic position. The study builds on a decision theoretic analysis of the social emotions that underlie these relative concerns. These emotions, envy and pride, respond to social losses and gains, respectively. Our main result is that envy leads to conformism in consumption behavior and pride to diversity. We thus establish a link between emotions that are the object of study in psychology and neuroscience, and important features of economic variables, in the first place the equilibrium distribution of consumption and income. (JEL D11, D51, D63, E21, J22 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

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Publisher
American Economic Association
Copyright
Copyright © 2014 by the American Economic Association
Subject
Articles
ISSN
1945-7685
eISSN
1945-7685
DOI
10.1257/mic.6.4.237
Publisher site
See Article on Publisher Site

Abstract

Abstract We study a two-period economy in which agents' preferences take into account their relative economic position. The study builds on a decision theoretic analysis of the social emotions that underlie these relative concerns. These emotions, envy and pride, respond to social losses and gains, respectively. Our main result is that envy leads to conformism in consumption behavior and pride to diversity. We thus establish a link between emotions that are the object of study in psychology and neuroscience, and important features of economic variables, in the first place the equilibrium distribution of consumption and income. (JEL D11, D51, D63, E21, J22 )

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Nov 1, 2014

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