Campus Units

Economics

Document Type

Article

Publication Version

Accepted Manuscript

Publication Date

12-2016

Journal or Book Title

Arthaniti: Journal of Economic Theory and Practice

Volume

15

Issue

2

First Page or Article ID Number

11

Last Page

28

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.

JEL Classification

D01, R21

Comments

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.

Copyright Owner

The Department of Economics, University of Calcutta

Language

en

File Format

application/pdf

Published Version

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