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Income and happiness across Europe: Do reference values matter?

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Author Info
Caporale, Guglielmo Maria
Georgellis, Yannis
Tsitsianis, Nicholas
Yin, Ya Ping

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Abstract

Using cross-sectional data from the first two rounds of the European Social Survey (ESS), we examine the relationship between income, relative income and happiness across 19 European countries. We find that a positive and statistically significant relationship between income and happiness does exist, but such a relationship is weakened by reference income. We also find that while reference income exerts a negative impact on happiness in the case of Western European countries, its effect is positive in the case of the Eastern European countries, a finding that is consistent with the [`]tunnel effect' hypothesis. This suggests that for Eastern Europeans reference income is likely to be a source of information for forming expectations about their future economic prospects, rather than a yardstick measure for social comparisons.

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Publisher Info
Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 30 (2009)
Issue (Month): 1 (February)
Pages: 42-51
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Handle: RePEc:eee:joepsy:v:30:y:2009:i:1:p:42-51

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Related research
Keywords: Comparison income Reference groups Happiness Life satisfaction;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andrew E. Clark & Claudia Senik, 2008. "Who compares to whom? The anatomy of income comparisons in Europe," PSE Working Papers 2008-65, PSE (Ecole normale supérieure), revised Sep 2009. [Downloadable!]
    Other versions:
  2. Yamamura, Eiji, 2009. "Trial experience, satisfaction and incentive to bring another lawsuit: Does aspiration level influence winners and losers?," MPRA Paper 16149, University Library of Munich, Germany. [Downloadable!]
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