Comments and Questions

This is an interesting and nice analytically paper with an appealing interpretation of the Easterlin paradox and the Kuznets consumption puzzle. The conclusion at p. 12 that: “...the lowest payoff growth rate occurs in the lowest income group. Payoff growth rates at the bottom of the social class are even zero or negative” is a remarkable one because it captures the fact that most people of low socioeconomic status are not in a position to pursue a higher status is. The author might mention this in a footnote. Moreover, note that since present consumption for these people is a necessity, and since at p. 13: “the aggregate saving rate increases or decreases, depending on whether the trendsetting income groups see present consumption as a necessity or luxury” and “saving rates are increasing in income for the majority of consumers”, it follows that most people are of low socioeconomic status. “Low”, in the sense more or less of Stigliz (2013), and this in turn implies that the paper offers in addition a formal modeling of Stigliz’s arguments against those of Krugman (2013). The author might want to say something about it although the paper deserves merit as it stands. References Krugman, P. (2013). Inequality and recovery. The New York Times, January 20. Retrieved from https://krugman.blogs.nytimes.com/2013/01/20/inequality-and-recovery/ Stiglitz, J.E. (2013). Inequality is holding back the recovery, The New York Times, January 19. Retrieved from https://opinionator.blogs.nytimes.com/2013/01/19/inequality-is-holding-back-the-recovery/