Munich Personal RePEc Archive

The American Pride and Aspiration

Santra, Sattwik and Chaudhury, Ranajoy (2015): The American Pride and Aspiration.

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There has been a growing literature on empirical studies on status consciousness. Specifically, the predictions of signaling models and theory of subjective well-being are empirically tested and found to support status seeking behavior. Instead of relying on these established theoretical models on status seeking behavior, we adopt a very general approach and model how individuals’ status seeking behavior influences their consumption patterns. We define both an aspiration aspect and a pride aspect of status. Individuals aspire to reach higher status which we call aspiration aspect of status. Individuals also try their best to maintain at least their current status with respect to relatively lower income group class, which we call the pride aspect of status. We model these two aspects of status for the U.S households using Panel Study of Income Dynamics (PSID) data. Some of the results obtained go against the conventional signaling models which predict that as the mean income of the reference group increases, consumption of conspicuous goods decreases. Also, we get results contrary to Duesenberry’s claim that rich are not concerned about their position relative to lower income group class.

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