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Relative deprivation, reference groups and the assessment of standard of living

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  • Silber, Jacques
  • Verme, Paolo

Abstract

This paper proposes two new indices of relative deprivation, derived from an extension of the concept of generalized Gini to the measurement of distributional change. Population- and income-weighted relative deprivation indices are then defined and, using panel data from the Consortium of Household Panels for European Socio-Economic Research (CHER), we check which of the various ways of defining individual deprivation best fits the answers given by individuals on the degree of their satisfaction with income. We find that the deprivation indices proposed are consistently and negatively correlated with income satisfaction as reported by respondents, that income weighted measures fit better than population weighted measures and that this fit improves with countries that experienced deep institutional changes such as the transitional economies of Eastern Europe.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 36 (2012)
Issue (Month): 1 ()
Pages: 31-45

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Handle: RePEc:eee:ecosys:v:36:y:2012:i:1:p:31-45

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Keywords: Generalized Gini index; Income satisfaction; Relative deprivation;

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  8. Bernard M.S. Van Praag, 2010. "Well-being Inequality and Reference Groups - An Agenda for New Research," CESifo Working Paper Series 2984, CESifo Group Munich.
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  21. Hopkins, Ed, 2008. "Inequality, Happiness and Relative Concerns: What Actually is their Relationship?," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2008-01, Scottish Institute for Research in Economics (SIRE).
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Cited by:
  1. Marek Kośny, 2012. "Relative Income Changes and an Identification of Growth Pattern," Working Papers 268, ECINEQ, Society for the Study of Economic Inequality.
  2. Lee, Won Fy, 2012. "The Effect of Relative Income in the Dynamics of Migration: Evidence from the VHLSS Panel Data," Master's Theses, University of Minnesota, Department of Applied Economics 142096, University of Minnesota, Department of Applied Economics.

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