Regulating the Environmental Consequences of Preferences for Social Status within an Evolutionary Framework

Taking as given that we are consuming too much and that overconsumption leads to environmental degradation, the present paper examines the regulator's choices between informative advertisement and consumption taxation. We model overconsumption by considering individuals that care about social status apart from the intrinsic utility, derived from direct consumption. We assume that there also exist individuals that care only about their own private consumption and we examine the evolution of preferences through time by allowing individuals to alter their behavior as a result of a learning process, akin to a replicator dynamics type. We consider the regulator's choice of consumption taxation and informative advertisement both in an arbitrary and an optimal control context. In the arbitrary overconsumption control context we find that the regulator could decrease, or even eliminate, the share of status seekers in the population. In the context of optimal overconsumption control, we show that the highest welfare is attained when status seekers are completely eliminated, while the lowest in the case that the entire population consists of status seekers.


Issue Date:
Apr 24 2015
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/202440
Total Pages:
27
JEL Codes:
Q53; Q58; D62; D82
Series Statement:
CCSD
034.2015




 Record created 2017-04-01, last modified 2018-01-23

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)