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Interdependent Preferences: Early and Late Debates on Emulation, Distinction, and Fashion

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  • Economics

Abstract

This version: Working Paper 4/2010 Dipartimento di Scienze Economiche Università di Cassino Marina Bianchi Department of Economics, University of Cassino Interdependent Preferences: Early and Late Debates on Emulation, Distinction, and Fashion Dipartimento di Scienze Economiche Università degli Studi di Cassino Via S.Angelo Località Folcara, Cassino (FR) Tel. +39 0776 2994734 Email [email protected] Interdependent Preferences: Early and Late Debates on Emulation, Distinction, and Fashion Marina Bianchi Department of Economics and CreaM University of Cassino [email protected] Introduction The social dimension of consumption – how consumers interact through market and non-market relations – is as important as the interdependencies among decisions taken by firms. As important, that is, but more difficult to analyse since subjective and objective behavioural features inevitably intermix in social forms of consumption (as in consumption in general). Its complexity might explain why this dimension of economic behaviour has been largely neglected in economic theory. Perhaps this complexity also accounts for the fact that when economists have taken notice of the problem they have tended to do so using borrowed models, mainly from sociology. Yet the challenge that the problem of interdependent preferences might pose to economic theory has surfaced often in economic debates. Tracts on trade of the late seventeenth and early eighteenth centuries were full of discussions as to what form consumption should take if it was to stimulate economic growth1. In these debates luxury and ostentatious display were condemned (with the exception of the expenses of the very rich), while frugality and temperance were promoted as desirable private virtues that would promote public benefits. There were also discordant voices. First Barbon (1690) and then Mandeville (1714) saw in consumption, especially of non-essentials, the great propulsive force that spurred both

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