Attitude choice, economic change, and welfare

As supported by commonsense and substantial evidence (discussed in Sections 1 and 2), one`s attitude toward wealth may affect utility and people can, at least to some extent and at some costs, choose their attitudes. Using a very simple model of attitude choice (Section 3) and analysing the comparat ive static effects of some economic changes (Section 4), this paper shows t hat individuals with high/low incomes tend to adopt an attitude emphasizing the importance of material consumption more/less. Economic growth unambigu ously increases the utility of the rich (unless the generation of growth it self is too costly) by increasing both their income and the prevailing mate rialistic attitude. It has an ambiguous effect on the poor as it makes them better off through a higher income level, but worse off through a higher p revailing materialistic attitude. (C) 2001 Elsevier Science B,V. All rights reserved.