Year: 2006
Type: article
Abstract: A number of commentators have expressed concern about the high level of debt incurred by the average American.While high debt is an appropriate response to low interest rates and an expected growth in income, it has also been suggested that it reflects consumption patterns that are suboptimal. 1 One possibility is that a competition for social status, via the purchase of conspicuous goods, has led to excessive consumption Indeed, the purchase of many visible goodssuch as cars, boats, home appliances, jewelry, and electronic equipment-appears to be motivated, at least in part, by a desire to advance in the social ranking.In this race, where one consumer's gain is another's loss, there can be no winners on average, and the resources deployed are thus wasted from a social perspective.Wasteful consumption, however, is not necessarily the same as excessive borrowing.Consumers, for instance, might be as eager to outspend their neighbors in the future as they are in the presentt
Source: bepress Legal Repository
Authors: Gary S. Becker, Luis Rayo
Institution: University of Chicago
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1575907617