Barnett, Richard; Bhattacharya, Joydeep; Bunzel, Helle - School of Economics and Management, University of Aarhus - 2008
Does a rise in income inequality induce people to work harder to stay in the rat race (“keep up with the Joneses”) or to simply drop out? We investigate this issue in a simple new framework in which heterogeneous ability agents get extra utility if their consumption keeps up with the...