Abstract
After a certain ceiling has been reached (i.e. around $ 10,000), an increase in average income
in any one country will not lead to increased personal happiness. Such additional earnings are,
in all probability, expended rather on satisfying relative needs. Cars with a low fuel efficiency
(big cars; cars with powerful engines) possibly satisfy more relative needs than absolute needs.
This is why a general trend towards more economical vehicles does not or hardly leads to a
reduction in contentment: relative needs satisfaction, coupled with the status aspect, does not
need to suffer from this. It is the satisfying of relative needs and the emergence of status effects
in consumption that is responsible for inefficient market functioning because of the occurrence of
'consumption externalities'. There is therefore a welfare economic argument for adhering to a
regulatory policy in which the consumption of relatively low status goods is encouraged while
the consumption of relatively high status goods is discouraged. In view of the sharp price
increases required to make the national car volume substantially more economical and in order
to survive the considerable resistance that will be put up to such price rises, it might be
preferable to introduce policies like 'fee-bates' or negotiable rights rather than to wield price
policies directed at effecting a trend in the direction of more economical car usage.
in any one country will not lead to increased personal happiness. Such additional earnings are,
in all probability, expended rather on satisfying relative needs. Cars with a low fuel efficiency
(big cars; cars with powerful engines) possibly satisfy more relative needs than absolute needs.
This is why a general trend towards more economical vehicles does not or hardly leads to a
reduction in contentment: relative needs satisfaction, coupled with the status aspect, does not
need to suffer from this. It is the satisfying of relative needs and the emergence of status effects
in consumption that is responsible for inefficient market functioning because of the occurrence of
'consumption externalities'. There is therefore a welfare economic argument for adhering to a
regulatory policy in which the consumption of relatively low status goods is encouraged while
the consumption of relatively high status goods is discouraged. In view of the sharp price
increases required to make the national car volume substantially more economical and in order
to survive the considerable resistance that will be put up to such price rises, it might be
preferable to introduce policies like 'fee-bates' or negotiable rights rather than to wield price
policies directed at effecting a trend in the direction of more economical car usage.
Original language | Dutch |
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Pages (from-to) | 187-201 |
Number of pages | 15 |
Journal | Tijdschrift voor vervoerswetenschap |
Volume | 99 |
Issue number | 3 |
Publication status | Published - 1999 |