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Direct evidence on income comparisons and their welfare effects

Claudia Senik ()

PSE Working Papers from HAL

Abstract: This paper provides direct evidence that comparisons exert a significant effect on subjective well-being. It also evaluates the relative importance of different types of benchmarks. Internal comparisons to one's own past living standard outweigh any other comparison benchmarks. Local comparisons (to one's parents, former colleagues or high school mates) are more powerful than self-ranking in the social ladder. The impact of comparisons is asymmetric: under-performing one's benchmark always has a greater welfare effect than out-performing it (in absolute value). Comparisons which reduce satisfaction also increase the demand for income redistribution, but there, the relative impact of subjective ranking is preponderant.

Keywords: subjective well-being; income comparisons; demand for income redistribution; internal and external benchmarks; transition; bien-être subjectif; données qualitatives; comparaisons de revenu; mobilité; groupes de référence internes et externes (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-hap and nep-ltv
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00588023
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Related works:
Journal Article: Direct evidence on income comparisons and their welfare effects (2009) Downloads
Working Paper: Direct Evidence on Income Comparisons and their Welfare Effects (2009) Downloads
Working Paper: Direct Evidence on Income Comparisons and their Welfare Effects (2007) Downloads
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