Essays on inequality, social preferences and consumer behavior.

Summary This thesis investigates how intra- and inter-group inequality affects consumer behavior and welfare via social comparison effects. The goal is to better understand a number of social phenomena that have been largely neglected by classical consumer theory. For example, to what extent do visible determinants of social identity such as ethnic group or caste affect household consumption behavior? How can we understand the over-indebtedness of the poorest despite the persistent stagnation of their real income? Or does the consumption of luxury goods become necessary in more unequal societies and what does this tell us about the social limits of economic growth? To do so, the thesis incorporates important results from behavioral economics - in particular regarding social preferences and subjective evaluation of well-being - into the theory of consumers and savings. Chapter 1 develops a model of relative consumption that takes into account comparison effects over time and between goods. The following chapters identify these effects using representative population survey data and large databases obtained via web-scrapping methods. Chapter 2 focuses on housing debt in the United States when households are concerned about the relative size of their homes. Chapters 3 and 4 analyze the social component of spending in India and its implication for malnutrition using standard and structural estimation methods.