(c) 2016 Jon L Gelman, All Rights Reserved.

Saturday, September 27, 2014

Income Inequality: The Conseqences on The Economy

"ncome inequality at the county-level is 
positively associated with both the fraction of high status cars bought in the county, and 
indicators of consumer leverage. These results suggest the signaling motive might feature in 
some durable goods consumption choices, as households seek to “get ahead of the Joneses”, and 
invest in status consumption goods to signal that they might have advanced in their relative 
income position. These findings also suggest that rising inequality might have broader 
macroeconomic consequences, including a reduced savings rate and greater household debt."