Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life

Deckers Thomas, Armin Falk and Schildberg-Hörisch Hannah ()
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Deckers Thomas: Institute of Applied Microeconomics, University of Bonn, Adenauerallee 24–42, 53113 Bonn, Germany
Schildberg-Hörisch Hannah: Institute of Applied Microeconomics, University of Bonn, Adenauerallee 24–42, 53113 Bonn, Germany
Authors registered in the RePEc Author Service: Hannah Schildberg-Hoerisch ()

The B.E. Journal of Economic Analysis & Policy, 2016, vol. 16, issue 3, 1337-1358

Abstract: According to economic theory, real income, i. e., nominal income adjusted for purchasing power, should be the relevant source of life satisfaction. Previous work, however, has studied the impact of inflation-adjusted nominal income and hardly taken into account regional differences in purchasing power. We use novel data to study how regional price levels affect life satisfaction. The data set comprises a price level for each of the 428 administrative districts in Germany. Controlling for district heterogeneity other than the price level, our results show that higher price levels significantly reduce life satisfaction.

Keywords: life satisfaction; neutrality of money; price index; real income; standard of living (search for similar items in EconPapers)
JEL-codes: C23 D31 D60 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Nominal or Real?: The Impact of Regional Price Levels on Satisfaction with Life (2013)
Working Paper: Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life (2013)
Working Paper: Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life (2013)
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DOI: 10.1515/bejeap-2015-0215

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