Attitudes and Allocations: Status, Cognitive Dissonance, and the Manipulation of Attitudes

Economic studies of social status have typically focused on individuals engaging in relative comparisons based on certain characteristics (e.g. consumption, wealth) without considering why these characteristics are deemed “status worthy”. In this paper, individuals choose a status-earning characteristic in order to reduce mental discomfort (dissonance). As a result, those individuals with the highest marginal utility from income are often the first to misconstrue or abandon these incentives in favor of alternate forms of seeking status. The model provides an explanation for endogenous class formation and highlights the role of redistributive taxation in manipulating individuals’ attitudes towards status.