"Relativity, Inequality and Public Policy"

In economics, “relativity” is the idea that it is position relative to others that motivates behavior and determines individual and therefore social wellbeing. This idea has distinguished pedigree, going back in modern times to Duesenberry’s relative income hypothesis, and even further back to Adam Smith’s claim that “a creditable day-laborer would be ashamed to appear in public without a linen shirt”.

However, in the last two decades research has accelerated on relative concerns and their interactions with inequality, and their implications for public policy. Conventional welfare economics with interdependent preferences has progressed alongside new departures in theoretical and experimental behavioral economics, and in the economics of happiness. Progressivity in taxation can be seen in a new light if inequality interacts with relativity to produce socially inefficient outcomes. At the same time, the debate between paternalism and libertarianism is also sharpened if people have feelings of envy towards their fellow beings because of their relative positions in society.

With this background, Cornell University and the University of Edinburgh are hosting a major international conference – “Relativity, Inequality and Public Policy” – to take stock of where we stand and to highlight the open questions.

The conference will start at 9.00am on Friday 5th of June and finish at 13.00 on Sunday 7th of June. It will be will be held in the David Hume Tower, Faculty Room South (G.02), George Square, Edinburgh, EH8 9JX

The conference organizers are Ed Hopkins, University of Edinburgh, and Ravi Kanbur, Cornell University.

Speakers at the conference include: Carol Graham, Andrew Oswald, Matthew Rabin, Imran Rasul, Aldo Rustichini, Bernard van Praag, Lise Vesterlund and Shlomo Yitzhaki.

There is no fee attached to participate in this event but please contact Gina Reddie before May 25 if you wish to attend.

The event is co-funded by SIRE, Cornell University and supported by the British Academy.

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