Inverted U-shaped conformism: An economic model of endogenous responses to the Joneses

Based on sociologists’ findings, it is more likely that middle-status people are “keeping up with the Joneses” while both the highest-status and lowest-status people are “running away from the Joneses”. Existing economic models fail to reproduce this inverted-U shaped (IUS) curve. In my model, response to the Joneses is endogenized and is related to one's status position. Under some reasonable assumptions, an IUS pattern will appear. A comparison with a sociological explanation of the same phenomenon and further implications will also be discussed.

► Middle-status people are “keeping up with the Joneses”.
► Highest-status and lowest-status people are “running away from the Joneses”.
► An economic model of this inverted-U shaped (IUS) curve is proposed.
► A comparison with a sociological explanation will be provided.