Absolute vs. relative income level

[Hentrich, Steffen]

Dear armchairs,

i think there is a at least partial contradiction between the hypothesis of 
diminishing marginal return of income and the hypothesis that people care about 
consuming more than their neighbors or about earning more than their neighbors (Frank: 
Luxury Fever). If the latter is true than the first hypothesis is weak. What do you 
think about this?

Steffen