Reference group inequality, positional goods, and their impact on subjective well-being: evidence from Turkey

M. Burak Önemli and Joel Potter

Review of Social Economy, 2021, vol. 79, issue 4, 636-663

Abstract: Using the 2013 Turkish Life Satisfaction Survey, we investigate two hypotheses that are novel to the happiness literature. The first of these hypotheses is that income dispersion/inequality within an individual’s reference group has a negative effect on happiness, ceteris paribus; we find evidence to support this hypothesis. The second hypothesis is that housing is a positional good that has a negative positional externality; we find evidence to support this hypothesis as well. Additionally, we explore the notion that non-pecuniary factors (like social life satisfaction) carry more weight in explaining happiness than do standard pecuniary factors (such as an individual’s own income). Our findings suggest that in large part, the path to a happy life is through gaining access to a wealth of non-pecuniary characteristics. In a broad sense, our study explores the significance that comparison effects in the pecuniary domain can have on individual happiness.

Date: 2021
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DOI: 10.1080/00346764.2019.1690161

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