Giving Up on the Joneses? The Relationship between Income Inequality and Status-seeking

Abstract

The objective of this article is to study status-seeking, defined as pursuit for elevated social status, and how it relates to income inequality. Building on sociological, psychological, and economic literature, we formulate two opposing hypotheses suggesting a positive and a negative relationship between income inequality and status-seeking. To test these hypotheses, we use repeated cross-sectional micro-data from the European Social Survey, which was collected biannually from 2002 to 2014, and use it in combination with income inequality data from Eurostat. With this data we complement existing studies by focusing on both between- and within-country over-time variability in income inequality and status-seeking. We find evidence of a negative relationship between income inequality and status-seeking. This supports the hypothesis that with higher levels of economic inequality people have less incentives and less motivation to strive for heightened social status.