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 object of study in psychology and neuroscience,
and important features of economic variables, in the first place the
equilibrium distribution of consumption and income.
Maccheroni, Fabio, Massimo Marinacci, and Aldo Rustichini.
"Pride and Diversity in Social Economies."
American Economic Journal: Microeconomics,
Consumer Economics: Theory
Exchange and Production Economies
Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Macroeconomics: Consumption; Saving; Wealth
Time Allocation and Labor Supply