Economic Choices and Status: Measuring Preferences for Income Rank

In this paper we report on the trade-offs that 1,068 Australian university students make between absolute income and the rank of that income in hypothetical income distributions. We find that income rank matters independently of absolute income, with greater weight given to rank by males, migrants, and individuals from wealthy families. Rank-sensitive individuals require as much as a 200 per cent increase in income to be compensated for going from the top to the bottom of the income distribution. In terms of reference groups, we find migrants who reside abroad for longer periods of time, and with more affluent job titles, are more likely to compare themselves to others at the destination. This allows us to derive a dynamic choice model of compensating incomes that allows for endogenous tastes and rates of assimilation. The model predicts the average respondent to need a permanent increase in income of up to $10,000 when moving from a society with a mean income of$14,000 (e.g. Mexico) to a society with a mean income of $46,000 (e.g. the USA).relative utility, status, income rank, stated-preferences, migrants

Conspicuous Consumption, Conspicuous Health, and Optimal Taxation

We present a simple model of status-seeking over multiple socioeconomic domains by introducing the concept of conspicuous health as an argument in the utility function, in addition to the well-established conspicuous consumption term. We explore the implications of such a utility function for optimal income taxation, where we show an increase in concerns for conspicuous health to have an opposite effect on the marginal tax rate, compared to an increase in concerns for conspicuous consumption. Using life satisfaction panel data from Australia, along with an improved measure of exogenous reference groups (that accounts for the ‘time era’ of respondents), we find evidence of a comparison health effect

Are fruit and vegetables good for our mental and physical health? Panel data evidence from Australia

This paper studies the effect of fruit and vegetable consumption on human well-being. Using individual-level panel data from a representative sample of Australian households, I estimate the intake of fruit and vegetables to have positive and statistically significant impacts on a wide range of subjective well-being measures, including life satisfaction, self-assessed health, mental health, psychological distress, and vitality. The estimated relationships are mainly non-monotonic in nature. For most well-being measures, the optimal consumption bundle consists of 4-5 daily portions of fruit and 4-5 daily portions of vegetables. The intake of fruit is predicted to have a greater relative impact (than vegetables) on overall mental health and psychological distress scores. There are also gender differences in the estimated effects, with the intake of fruit and vegetables increasing average happiness and self-reported health scores of women significantly more than that of men. Overall, the results imply that less than one-quarter of adults in Australia consume the optimal daily amount and mix of fruit and vegetables. I discuss the relevance of the findings for government policy-makers and health professionals, in reference to existing public health promotions and guidelines

Is envy harmful to a society’s psychological health and wellbeing? A longitudinal study of 18,000 adults

Nearly 100 years ago, the philosopher and mathematician Bertrand Russell warned of the social dangers of widespread envy. One view of modern society is that it is systematically developing a set of institutions -- such as social media and new forms of advertising -- that make people feel inadequate and envious of others. If so, how might that be influencing the psychological health of our citizens? This paper reports the first large-scale longitudinal research into envy and its possible repercussions. The paper studies 18,000 randomly selected individuals over the years 2005, 2009, and 2013. Using measures of SF-36 mental health and psychological well-being, four main conclusions emerge. First, the young are especially susceptible. Levels of envy fall as people grow older. This longitudinal finding is consistent with a cross-sectional pattern noted recently by Nicole E. Henniger and Christine R. Harris, and with the theory of socioemotional regulation suggested by scholars such as Laura L. Carstensen. Second, using fixed-effects equations and prospective analysis, the analysis reveals that envy today is a powerful predictor of worse SF-36 mental health and well-being in the future. A change from the lowest to the highest level of envy, for example, is associated with a worsening of SF-36 mental health by approximately half a standard deviation (p < .001). Third, no evidence is found for the idea that envy acts as a useful motivator. Greater envy is associated with slower -- not higher -- growth of psychological well-being in the future. Nor is envy a predictor of later economic success. Fourth, the longitudinal decline of envy leaves unaltered a U-shaped age pattern of well-being from age 20 to age 70. These results are consistent with the idea that society should be concerned about institutions that stimulate large-scale envy

The midlife crisis

This paper documents a longitudinal crisis of midlife among the inhabitants of rich nations. Yet middle-aged citizens in our data sets are close to their peak earnings, have typically experienced little or no illness, reside in some of the safest countries in the world, and live in the most prosperous era in human history. This is paradoxical and troubling. The finding is consistent, however, with the prediction -- one little-known to economists of Elliott Jaques (1965). Our analysis does not rest on elementary cross-sectional analysis. Instead the paper uses panel and through-time data on, in total, approximately 500,000 individuals. It checks that the key results are not due to cohort effects. Nor do we rely on simple life-satisfaction measures. The paper shows that there are approximately quadratic hill-shaped patterns in data on midlife suicide, sleeping problems, alcohol dependence, concentration difficulties, memory problems, intense job strain, disabling headaches, suicidal feelings, and extreme depression. We believe the seriousness of this societal problem has not been grasped by the affluent world’s policy-makers

Indirect reciprocity and prosocial behaviour : evidence from a natural field experiment

Some of the greatest human achievements are difficult to imagine without prosociality. This article employs a natural field experiment to investigate indirect reciprocity in natural social interactions. We find strong evidence of indirect reciprocity in one‐shot interactions among drivers. Subjects for whom other drivers stopped were more than twice as likely to extend a similar act to a third party. This result is robust to a number of factors including age, gender, social status, presence of onlookers, and the opportunity cost of time. We provide novel evidence for the power of indirect reciprocity to promote prosocial behaviour in the field

Does eating fruit and vegetables also reduce the longitudinal risk of depression and anxiety? A commentary on ‘Lettuce be Happy’

This commentary provides evidence of a longitudinal connection between current diet and later mental health. We build upon a research study, Ocean, Howley, and Ensor (2019, forthcoming), which uses UK data to argue that consumption of fruit and vegetables may be able to improve people's self-assessed mental-health scores on the general health questionnaire (GHQ) and life-satisfaction scores. We show, in Australian data, that an equivalent result may be true for actual clinical diagnosis of depression and anxiety. We conclude that there appears to be accumulating evidence for the psychological power of fruit and vegetables