Relative Income and Happiness in Latin America: Implications for Inequality Debates

Mariano Rojas

Chapter Chapter 5 in The Economics of Happiness, 2019, pp 107-126 from Springer

Abstract: Abstract This chapter studies the importance of absolute-income and relative-income effects in explaining people’s well-being in Latin America. A happiness approach is followed. The empirical research uses the Latin American Gallup Survey 2007, with more than 14,000 observations covering all countries in the region and which contains information on household income and on life satisfaction. Reference-groups are constructed on the basis of country-gender-age criteria. It is found that Latin American’s well-being strongly depends on their relative income, while the absolute-income effect is of lesser importance. The relative-income effect is important and significant for all segments of the income distribution. These findings are consistent with Easterlin (1974) and have important implications for the implementation and design of economic policies and development strategies.

Keywords: Happiness; Income inequality; Relative income; Absolute income; Latin America (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-15835-4_5

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DOI: 10.1007/978-3-030-15835-4_5

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