A Curse of Comparison? Evidence on Reference Groups for Relative Income Concerns

Alice Kuegler ()
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Alice Kuegler: The World Bank, Postal: 1818 H Street, N.W., Washington, DC 20433

No 4820, Policy Research Working Paper Series from The World Bank

Abstract: This paper proposes that individuals care about the relative income of proximate reference groups. Making use of self-reported life satisfaction as a proxy for unobservable utility, the relative income of siblings is tested for relevance as a reference point for new sample data from Venezuela. Having greater perceived income than one's siblings is found to be positively linked to individual life satisfaction. This evidence supplements the scarce economic research on reference groups, supporting the hypothesis that individuals with proximate characteristics and resembling opportunities in life serve as points of comparison.

Keywords: reference groups; relative income; life satisfaction (search for similar items in EconPapers)
JEL-codes: D01 D12 D31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2009-01-01
New Economics Papers: this item is included in nep-dev and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4820

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