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2010-03-26 | EfD Discussion Paper

Does Relative Position Matter in Poor Societies? Evidence from a Survey Experiment in Rural Ethiopia

Martinsson, Peter, Haileselassie Medhin and Alpaslan Akay. 2010. “Does Relative Position Matter in Poor Societies? Evidence from a Survey Experiment in Rural Ethiopia.” EfD Discussion Paper 10.
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The authors investigated attitudes toward positionality among rural farmers in northern Ethiopia, using a tailored two-part survey experiment. On average, they found positional concerns neither in income per se, nor in income from aid projects among the farmers. These results support the claim that positional concerns are correlated with absolute level of income of a country.

Positional (or status) concern has been a frequently-discussed and well-documented phenomenon in developed countries (e.g., Solnick and Hemenway 1998; Johansson-Stenman, Carlsson, and Daruvala 2002; Clark, Frijters, and Shields 2008). Torsten Veblen (1899/1994, chap. 4) introduced this issue as a broad phenomenon across society by discussing conspicuous consumption while in modern popular media this is often referred to as “keeping up with the Joneses.” A result of positional concerns is that the utility derived from a good depends not only on the absolute amount of the good consumed, but also on the relative amount of the good consumed compared to the consumption of other individuals.