Where does money matter more?

Gudrun Svavarsdottir, Andrew Clark, Gunnar Stefansson and Tinna Laufey Asgeirsdottir
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Gudrun Svavarsdottir: University of Iceland [Reykjavik]
Gunnar Stefansson: University of Iceland [Reykjavik]
Tinna Laufey Asgeirsdottir: University of Iceland [Reykjavik]

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Abstract: There is much still to learn about the relationship between income and well-being, and in particular how this may depend on the economic and social context. We use Russian data to estimate individual Welfare Functions of Income, and examine two potentially context-dependent concepts: self-assessed income needs and welfare sensitivity to income (how well-being changes with income). The considerable geographical diversity in Russia provides within-country variation in GDP, inequality, population density, and unemployment. We first show that income needs exceed actual income on average in Russia, and that these needs are less sensitive to changes in income than in other countries. Second, income needs vary by individual characteristics, while welfare sensitivity does not. Welfare sensitivity is however related to the regional context. Last, our estimated contextual results help us to understand why the existing literature has produced such a wide range of results.

Keywords: Income; Well-being; Income needs; Welfare sensitivity; Income inequality (search for similar items in EconPapers)
Date: 2024-05
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Published in Journal of Economic Behavior and Organization, 2024, 221, pp.350-365. ⟨10.1016/j.jebo.2024.03.023⟩

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Journal Article: Where does money matter more? (2024)
Working Paper: Where does money matter more? (2024)
Working Paper: Where Does Money Matter More? (2024)
Working Paper: Where Does Money Matter More? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-04639541

DOI: 10.1016/j.jebo.2024.03.023

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