External Habits Formation and the Environment

Fatma Safi

doi:10.2478/ngoe-2021-0001

.blurhash-client-img { display: none !important; }

External Habits Formation and the Environment

Naše gospodarstvo/Our economy

Volume 67 (2021): Issue 1 (March 2021)

By: Fatma Safi

Open Access

|Apr 2021

Abstract

The present paper presents a standard overlapping generations model with external habits formation and environmental quality in the utility function. Our main objective is to study the impact of external habits on capital accumulation and environmental quality on the intertemporal competitive equilibrium. We notice that striving for status leads to environment worsening and capital increasing when the cohort size is large.

References

Alonso-Carrera, J., &Bouché, S. (2019). Capital accumulation when consumers are tempted by others consumption experience. Oxford Economic Papers, 72(3), 804–828. doi:10.1093/oep/gpz04610.1093/oep/gpz046
Search in Google Scholar Back to article
Alvarez-Cuadrado, F., & Long, N. V. (2011). Relative consumption and renewable resource extraction under alternative property-rights regimes. Resource and Energy Economics, 33(4), 1028–1053. doi:10.1016/j.reseneeco.2010.09.00310.1016/j.reseneeco.2010.09.003
Search in Google Scholar Back to article
Aronsson, T., & Johansson-Stenman, O. (2014). State-variable public goods and social comparisons. Journal of Environmental Economics and Management, 68(2), 390–410. doi:10.1016/j.jeem.2014.07.00110.1016/j.jeem.2014.07.001
Search in Google Scholar Back to article
Becker, G., & Mulligan, C. (1997). The endogenous determination of time preference. Quarterly Journal of Economics, 112(3), 729–758.Retrieved from http://www.jstor.org/stable/295125410.1162/003355397555334
Search in Google Scholar Back to article
Bouché, S. (2017). Aspirations, environmental quality and optimal tax policy. ECOBAS Working Papers, 2016-21.
Search in Google Scholar Back to article
Bouché, S., &de Miguel, C. (2019). Endogenous aspirations, growth and the rise of environmental concerns. Energy Economics, 84(S1). doi:10.1016/j.eneco.2019.10452610.1016/j.eneco.2019.104526
Search in Google Scholar Back to article
Brekke, K. A., & Howarth, R. B. (2003). Status, growth, and the environment: goods as symbols in applied welfare economics. Edward Elgar Publishing, Cheltenham.
Search in Google Scholar Back to article
Brekke, K. A., Howarth, R. B. & Nyborg, K. (2003). Status-seeking and material affluence: evaluating the Hirsch hypothesis. Ecological Economics, 45(1), 29–39. doi:10.1016/S0921-8009(02)00262-810.1016/S0921-8009(02)00262-8
Search in Google Scholar Back to article
de la Croix, D. (1996). The dynamics of bequeathed tastes. Economics Letters, 53(1), 89–96. doi:10.1016/S0165-1765(96)00888-910.1016/S0165-1765(96)00888-9
Search in Google Scholar Back to article
de la Croix, D., & Michel, P. (1998). Optimal growth when tastes are inherited. Journal of Economic Dynamics and Control, 23(4), 519–537.doi:10.1016/S0165-1889(98)00028-110.1016/S0165-1889(98)00028-1
Search in Google Scholar Back to article
Diamond, P. A. (1965). National debt in the neoclassical growth model. American Economic Review, 55, 279–293. Retrieved from: https://www.aeaweb.org/journals/aer
Search in Google Scholar Back to article
Eckerstorfer, P., & Wendner, R. (2013). Asymmetric and non-atmospheric consumption externalities, and efficient consumption taxation. Journal of Public Economics, 106, 42–56. doi:10.1016/j.jpubeco.2013.07.00310.1016/j.jpubeco.2013.07.003
Search in Google Scholar Back to article
Goerke, L., & Hellesheim, I. (2013). Relative consumption, working time, and trade unions. Labour Economics, 24, 170–179. doi:10.1016/j.labeco.2013.08.00210.1016/j.labeco.2013.08.002
Search in Google Scholar Back to article
Hirsch, F. (1976). The social limits to growth. Cambridge, Mass.: Harvard University Press.10.4159/harvard.9780674497900
Search in Google Scholar Back to article
Howarth, R. B. (1996). Status effects and environmental externalities. Ecological Economics, 16(1), 25–34. doi:10.1016/0921-8009(95)00076-310.1016/0921-8009(95)00076-3
Search in Google Scholar Back to article
Howarth, R. B. (2006). Optimal environmental taxes under relative consumption effects. Ecological Economics, 58(1), 209–219. doi:10.1016/j.ecolecon.2005.07.00710.1016/j.ecolecon.2005.07.007
Search in Google Scholar Back to article
Huang, K.X.D., Liu, Z. & Zhu, J.Q. (2015). Temptation and self-control: some evidence and applications. Journal of Money, Credit, and Banking, 47, 581-615. doi:10.1111/jmcb.1222210.1111/jmcb.12222
Search in Google Scholar Back to article
John, A., & Pecchenino, R. (1994). An overlapping generations model of growth and the environment. The Economic Journal, 104(427), 1393–1410. doi:10.2307/223545510.2307/2235455
Search in Google Scholar Back to article
John, A., Pecchenino R., Schimmelpfennig, D & Schreft, S. (1995). Short-lived agents and the long-lived environment. Journal of Public Economics, 58(1), 127–141. doi:10.1016/0047-2727(94)01459-210.1016/0047-2727(94)01459-2
Search in Google Scholar Back to article
Ljungqvist, L., & Uhlig, H. (2000). Tax policy and aggregate demand management under catching up with the Joneses. American Economic Review, 90(3), 356–366. doi:10.1257/aer.90.3.35610.1257/aer.90.3.356
Search in Google Scholar Back to article
Long, N. V., & Wang, S. (2009). Resource grabbing by status-conscious agents. Journal of Development Economics, 89(1), 39–50. doi:10.1016/j.jdeveco.2008.09.00510.1016/j.jdeveco.2008.09.005
Search in Google Scholar Back to article
Ng, Y. K., & Wang, J. (1993). Relative income, aspiration, environmental quality, individual and political myopia: why may the rat race for material growth be welfare reducing? Mathematical Social Sciences, 26(1), 3–23. doi:10.1016/0165-4896(93)90008-710.1016/0165-4896(93)90008-7
Search in Google Scholar Back to article
Wendner, R. (2003). Status, environmental externality, and optimal tax programs. Economics Bulletin, 8(5), 1–10. Retrieved from http://www.accessecon.com/pubs/eb/
Search in Google Scholar Back to article
Wendner, R. (2005). Frames of reference, the environment, and efficient taxation. Economics of Governance, 6(1), 13–31. doi:10.1007/s10101-004-0086-610.1007/s10101-004-0086-6
Search in Google Scholar Back to article