Abstract
Traditional tools of welfare economics identify the envy-related welfare loss from conspicuous
consumption only under very strong assumptions. Measured income and life satisfaction offers an
alternative for estimating such consumption externalities. The approach is developed in the context
of luxury car consumption (Ferraris and Porsches) in Switzerland. Results from household panel
data and fixed effects panel regressions suggest that the prevalence of luxury cars in the
municipality of residence has a negative impact on own income satisfaction.
Winkelmann, Rainer