Can faster income growth reduce well-being?

In his book Luxury Fever: Why Money Fails to Satisfy in an Era of Excess (1999) economist Robert Frank describes a number of significant trends in the U.S., and to a lesser extent in other industrial economies, since the late 1970s: rapidly rising incomes, for those at the upper end of the income scale, increasing hours of work, and increased consumerism (share of consumption of ‘status goods’). We demonstrate that the first development can parsimoniously account for the latter two. Our novel specification of the utility function simultaneously incorporates a relative-consumption effect for status goods and non-homotheticity of preferences between status and non-status goods, and we also allow for endogenous labour–leisure choice. It is possible that well-being has declined, notwithstanding the faster income growth, or at least not risen pari passu with the growth in earnings. Comparisons are made with other studies, and policy implications briefly discussed.

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Age and the Environment: The Global Movement Towards Age-Friendly Cities and Communities

Populations around the world are rapidly ageing, with some of the fastest change occurring in less-developed countries. One of the key determinants of the capabilities of older people, and whether they can achieve the things that are meaningful to them, is the environment in which they live. There is growing interest globally on how to foster “age-friendly” environments, and the World Health Organization's Global Network of Age-Friendly Cities and Communities now includes over 250 member cities with responsibility for around 100 million people. This paper outlines the background to the Network and describes some innovative strategies being adopted by members in different parts of the world.