Positional Concerns across Generations

Abstract

Socio-economic comparisons (relative or positional concerns) have several implications for utility, poverty, and economic development. This paper contributes to a small but growing literature by investigating the intergenerational persistence of positional concerns in urban Ethiopia, one of the world’s poorest countries. Using a series of survey experiments, we elicit the degree of positionality for various goods with different characteristics: (i) material versus non-material and (ii) visible versus non-visible. Our results suggest that the positional concerns of parents significantly explain children’s level of positionality. The positional concerns are transmitted to children mainly by the positional preferences of their mothers. Our results are robust to alternative checks, including estimators and omitted variables. We also analyze potential transmission channels. We identify gender – stronger between mothers and daughters – and assortative mating of parents – stronger among parents married through love marriage – as the primary mechanisms underlying the observed transmission of positional preferences. We also discuss the implications of our findings on development policy.