Martinsson, Peter and Olof Johansson-Stenman. 2006. “Honestly, why are you driving a BMW?.” Journal of Economic Behavior and Organization 60:2: 129-146.
This paper proposes that people derive utility not only from goods or their attributes as in standard models, but also from their self-image as influenced by their own perception of their preferences. In a representative survey, most respondents considered their own concern for status when purchasing a car to be minor in comparison with the status concerns of others.
Similarly, most individuals considered themselves to be more environmentally concerned than other people. These results are consistent with an extension of the conventional theory where an individual’s self-image is added as an argument in the utility function.