Direct Evidence on Income Comparisons and Subjective Well-Being

Markus Pannenberg and Laszlo Goerke

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: Subjective well-being (SWB) is generally argued to rise with relative income. However, direct evidence is scarce on whether and how intensively individuals undertake income comparisons, to whom they relate, and what they perceive their relative income to be. In this paper, novel data with direct information on income comparison intensity and perceived relative income with respect to predetermined reference groups is used to provide evidence on the relationship between income comparisons and SWB. We find negative correlations between comparison intensity and SWB for co-workers, people in the same occupation and friends. For job-related reference groups income comparisons are mostly upwards and perceiving to earn less than the reference group has a strong negative effect on SWB.

JEL-codes: D31 D62 I31 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-hap and nep-ltv
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Direct Evidence on Income Comparisons and Subjective Well-Being (2013)
Working Paper: Direct Evidence on Income Comparisons and Subjective Well-Being (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79799

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