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Green status seeking and endogenous reference standards

ABSTRACT

Abstract We develop and test a model of social comparison in which individuals gain status through green consumption relative to the green consumption of their peers and in which they strategically choose their peers so as to maximize total utility. In our framework consumers first choose their peers and associated green reference standard, taking into account that later this will affect the benefits and costs of green consumption choices. By using a unique set of survey data, we find evidence consistent with our framework of green status seeking and endogenous green reference standards. Environmental concern is found to have an important indirect effect on green consumption choices as it implies a more ambitious reference standard.AbstractWe develop and test a model of social comparison in which individuals gain status through green consumption relative to the green consumption of their peers and in which they strategically choose their peers so as to maximize total utility. In our framework consumers first choose their peers and associated green reference standard, taking into account that later this will affect the benefits and costs of green consumption choices. By using a unique set of survey data, we find evidence consistent with our framework of green status seeking and endogenous green reference standards. Environmental concern is found to have an important indirect effect on green consumption choices as it implies a more ambitious reference standard.