Income Rank and Upward Comparisons

Christopher J. Boyce and Gordon D. A. Brown

No 269895, Economic Research Papers from University of Warwick - Department of Economics

Abstract: Many studies have argued that relative income predicts individual well-being. More recently, it has been suggested that the relative rank of an individual’s income, rather than how that income compares to a mean or reference income, is important. Here the relative rank hypothesis is examined along with the additional hypothesis that individuals compare their incomes predominantly with those of slightly higher earners. A study of over 12,000 British adults using the British Household Panel Survey (a) confirms the importance of rank and (b) finds evidence that individuals compare upwards and to those most similar. This paper appears to be the first to show in fixed effect well-being equations that the influence of rank is more important than the influence of relative pay.

Keywords: Financial Economics; Public Economics (search for similar items in EconPapers)
Pages: 30
Date: 2008-01-28
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269895

DOI: 10.22004/ag.econ.269895

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