Status, Growth and the Environment

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Status, Growth and the Environment

Goods as Symbols in Applied Welfare Economics

9781840644333 Edward Elgar Publishing
Kjell Arne Brekke, Department of Economics, University of Oslo, Norway and Richard B. Howarth, Associate Professor of Environmental Studies, Dartmouth College, US
Publication Date: 2003 ISBN: 978 1 84064 433 3 Extent: 208 pp
Applied welfare economics proceeds from the assumption that preferences are fixed and independent of social context. Social psychologists and anthropologists, in contrast, interpret preferences as being strongly shaped by culture and the prevailing social norms. This viewpoint is supported by a wealth of evidence from ethnographies, social surveys, and experimental studies.

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Applied welfare economics proceeds from the assumption that preferences are fixed and independent of social context. Social psychologists and anthropologists, in contrast, interpret preferences as being strongly shaped by culture and the prevailing social norms. This viewpoint is supported by a wealth of evidence from ethnographies, social surveys, and experimental studies.

Integrating theory and evidence from a range of social sciences, the authors argue that the satisfaction derived from material goods depends upon their symbolic meaning, as people use goods to reinforce a positive social identity. They further contend that this calls for the incorporation of status preferences in economic models. The book finds that concerns over social status may lead decision makers to significantly overvalue consumption and undervalue the natural environment. In addition, income and consumption taxes that are normally regarded as ‘distortionary’ may be necessary to address the social costs of status signalling. Based on the available evidence, the authors argue that failing to account for status preferences can lead to flawed policy prescriptions in debates over optimal taxation, the economics of climate change and Environmental Kuznets Curves. To address this bias, the book offers a tractable, operational, and theoretically grounded approach to the economics of social status.

Students and scholars of ecological, environmental and resource economics will find Status, Growth and the Environment to be a highly original and fascinating read. It will also be of great relevance to anyone with an interest in applied welfare economics.
Critical Acclaim
‘Status, Growth and the Environment is an impressive book. It employs a series of well-known mathematical models to explore ideas that have previously been discussed in a qualitative way.’
– Journal of Economic Psychology

‘This is an important and creative extension of economic theory, asking fundamental questions about the relationship between the happiness of individuals and the future of the global environment, human welfare and economic growth. The book is a prescient synthesis of social science and economics, and is both wide-ranging and very readable. This work has implications far beyond economic theory, turning much perceived wisdom on its head through rigorous analysis.’
– Richard Wilk, Indiana University, US

‘Economics has occasionally recognised, but usually ignored, the common sense truth that human well-being depends on many things other than absolute consumption or wealth. Key among these is the status gained from prosperity relative to others, which makes prosperity both a private benefit and a social cost. After carefully surveying social psychology and anthropology as well as economics, Brekke and Howarth conclude that at least a third of prosperity’s effect on well-being comes from status. Armed with this number, they show how status effects dramatically alter the policy prescriptions of standard economic models of taxation, growth and the environment. Once taken seriously, this short book should have a long-term effect on economic policy and teaching.’
– Jack Pezzey, Australian National University, Australia

‘For many years to come this book will be the natural reference point for modern research on economics and the environment, where behavioural aspects are taken seriously. The authors impressively combine important insights from many social sciences, such as psychology, sociology and anthropology, without losing rigour in their economic analysis. I most strongly recommend this book to all serious scholars of our profession.’
– Olof Johansson-Stenman, Göteborg University, Sweden

‘Here are two economists who are not afraid to question their discipline’s facile assumption that each individual is the best judge of his or her own interests. In a rigorously reasoned analysis, the authors explore instructively the implications for economic growth and environmental policy when economic theory is expanded to incorporate well-established findings by other disciplines of social interdependence. Highly recommended.’
– Richard A. Easterlin, University of Southern California, US
Contents
Contents: Preface 1. Introduction 2. Consumption, Identity and Behavioral Motivation 3. The Psychology of Well-Being 4. Modelling Socially Contingent Preferences 5. Status Signalling and Environmental Externalities 6. Status Signalling and Taxation 7. Status Signalling and Climate Change 8. Status Signalling and Economic Growth 9. Status Signalling and Environmental Kuznets Curves 10. Social Status in Applied Welfare Economics: Models and Rhetoric Bibliography Index

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