Positional Concerns and Institutions: Some Arguments for Regulation

People care about their relative standing in the distribution of various goods and positions. This fact is increasingly discussed in heterodox economic circles because it challenges the view of a rational, self-interested individual as presented in mainstream economics. Nevertheless, more than their implications for economics, positional concerns imply important normative dimensions. There have been presumed to be a symptom of envy, reduce people’s happiness, and create problems of social interaction or economic inefficiencies. Individuals are, for instance, prone to pick states of the world that improve their relative standing, but worsen the absolute situation of everyone else, including themselves. This article offers a typology of the normative justifications for why institutions could be required to regulate positional concerns. The intent is to prove that some are more convincing than others, namely that invoking envy or subjective well-being is not fully satisfying for regulating positional concerns. More compelling reasons seem, in complement with efficiency, to be related to considerations for equality. In other words, if institutions could have strong reasons to pay attention to and regulate positional concerns, it would be in virtue of their impact on the social product and individuals’ conditions of living.