nep-hap New Economics Papers
on Economics of Happiness
Issue of 2015‒12‒28
two papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. On the Equilibrium and Welfare Consequences of Going Ahead of the Smiths By Frédéric Gavrel; Thérèse Rebière
  2. Inequality and welfare: Is Europe special? By Alain Trannoy

  1. By: Frédéric Gavrel (CREM - Centre de Recherche en Economie et Management - CNRS - Centre National de la Recherche Scientifique - Université de Caen Basse-Normandie - UR1 - Université de Rennes 1); Thérèse Rebière (IZA Bonn)
    Abstract: This paper provides an analysis of the social consequences of people seeking to go ahead of the Smiths. All individuals attempt to reach a higher rank than the Smiths, including the Smiths themselves. This attitude gives rise to an equilibrium in which all individuals have equal utilities but unequal (gross) incomes. Due to a rat-race effect, individuals devote too much energy to climbing the social scale. However, laissez-faire equilibrium is an equal-utility constrained social optimum. Conversely, an utilitarian social planner would not choose utility equality. Unexpectedly, this social ambition theory fairly well accounts for empirical intermediate wage inequality.
    Keywords: Going ahead of the Smiths,Social interactions,Well-being,Inequalities,Efficiency
    Date: 2015–12
  2. By: Alain Trannoy (Aix-Marseille University, CNRS and EHESS, France)
    Abstract: We review the literature about inequality and welfare with a particular focus on whether Europe has a special sensitivity to these matters or specific outcomes. We argue that both statements are likely to be true which raises the possibility of a causal link. Europe has relatively good results in terms of inequality and welfare in comparison with other continents and more specifically America, because these issues matter for European people. Still, research needs to be fostered in at least 5 areas that are detailed at the end of this review. A specific attention is devoted to the contribution of other social sciences and natural sciences (cognitive science) to the development of our knowledge for these fields.
    Keywords: Inequality, income inequality, equality of opportunity, welfare, well-being, Europe, the U.S.
    JEL: D63 I31 P52 O51 O52
    Date: 2015–11

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