Status effects and negative utility growth

This paper explains the observed stagnation of 'happitiess' measures throug h a growth model in which agents care about conspicuous consumption. 'Norma l goods' confer direct utility, While 'Status goods' confer utility only at the expense of others. Firms can improve the quality of both goods through R&D. The Nash equilibrium of the consumer game results in the share of exp enditure on status goods increasing with the number of times the status goo d has been improved. As the economy grows, resources for innovation are tra nsferred entirely to status-good R&D. The resulting long-run rate of utilit y growth is negative.