The cost of keeping‐up with the Joneses: Relative deprivation and food spending in Cameroon

Abstract

AbstractThis paper examines the implications of keeping‐up with the Joneses for household food spending using a nationally representative data for Cameroon. Specifically, it employs the heteroskedasticity‐based identification strategy to address the endogeneity of relative deprivation and the recentred influence function (RIF) regression to account for heterogeneity in the effect of relative deprivation across percentiles. Mean regression results show that relative deprivation has a negative effect on food spending overall and the effect is stronger among rural households compared with urban households. The RIF regression results reveal that relative deprivation correlates negatively with food spending from the lower percentile up to 70th percentile, meanwhile, at the upper tail of the distribution, it has no significant effect. These findings have public policy implications for the taxation of luxury goods.