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It is well documented that individuals are concerned with social comparisons and status, particularly as it pertains to consumption. This paper advances the hypothesis that the degree to which individuals in a society are concerned with status is determined by that society's stage of development, which we proxy by its average level of wealth. Social comparisons in terms of consumption seem to be more important during the early stages of development rather than in later stages, due to, among other factors, the evolution of institutions (education), culture, and social norms that are opposed to, or at least discourage, conspicuous consumption activities. To address this process, we endogenize the degree of status concern, by relating it to average national wealth, and demonstrate that over time, as a country develops, this degree (with respect to consumption) declines. We refer to this mechanism as \endogenous dynamic status preferences." While this is a natural departure from standard assumptions, dynamic status preferences lead to dramatic changes in the implications of the basic model. Our theory replicates the contradictory historical facts of an increasing saving rate along with declining returns to capital over time. Within an otherwise standard neoclassical growth model, we provide a new mechanism to explain the saving rate dynamics (a rising- or inversely U-shaped transitional path) and the comparative development of income inequality across countries. We advance our knowledge about the development of income and wealth inequality by complementing the work of Caselli and Ventura (2000) and Piketty (2014) by introducing a dynamic behavioral factor, as opposed to their technological vehicle. The advantage of our behavioral mechanism is that it can explain the development of income inequality even after economies have technologically been converged (e.g. US vs Europe, Fig. 1 vs Fig. 2). In particular, we showed that differentials in the strength of the dynamic status effect can propagate variation of income inequality that is attributed to the differential response of agents to productivity shocks rather than a technological bias on the factor of production as in Piketty (2014). As a policy implication, our theory suggests that policies that target productivity advancement towards increasing the income of the poor countries may not be sufficient to reduce income inequality when poor countries direct their income to unproductive" uses such as status goods consumption. Instead, institutions that support ways behavioral changes (like educational institutions) turn out to be more effective. [ABSTRACT FROM AUTHOR]

In this paper we unify existing theories and empirical evidence on the origins of obesity and examine the effects of fiscal policy on the dynamic evolution of weight. We build a dynamic general equilibrium growth model, with two sectors, one producing food and the other producing a composite consumption good. Weight is a function of rational choice as well as labor allocation between the two sectors. By estimating utility from weight and calibrating the US economy we show that (i) technological advances in agriculture decrease food prices and increase weight but not necessarily through higher food consumption but through lower calorie expenditure, (ii) reducing capital taxation, initially depresses weight levels through higher food prices; steady state food consumption decreases due to a price substitution effect but weight soars due to lower calorie expenditure, (iii) reducing taxation on food increases food consumption and weight levels in equilibrium. Labor reallocation towards the less sedentary sector on one hand and higher income on the other function as contradictory forces. [ABSTRACT FROM AUTHOR]