Status, the distribution of wealth, and growth

We analyze a simple model of endogenous growth in which individuals care ab out both consumption and their rank in the distribution of wealth. We show that the steady-growth rate of the economy increases with both the strength of the status-seeking motive and the initial equality of the wealth distri bution. Contrary to the basic model of endogenous growth, the equilibrium g rowth rate is not necessarily smaller than in the social optimum, and we id entify the circumstances under which the two coincide.