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Relative versus absolute income, joy of winning, and gender: Brain imaging evidence

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  • Dohmen, Thomas
  • Falk, Armin
  • Fliessbach, Klaus
  • Sunde, Uwe
  • Weber, Bernd

Abstract

In this paper we study the role of absolute versus relative income using functional magnetic resonance imaging (fMRI). While being scanned in two adjacent MRI scanners, pairs of subjects had to simultaneously perform a simple estimation task that entailed monetary rewards for correct answers. We show that a variation in the comparison subject's payment affects blood oxygenation level-dependent (BOLD) responses in the ventral striatum. This brain region is engaged in the prediction and registration of primary rewards such as food delivery as well as more abstract forms of rewards like money. In particular, we show that activation in the ventral striatum increases in absolute income and – for a given level of absolute income – decreases in lower relative income. Using a male and a female sample allows us to study whether the perception of relative and absolute incomes is gender specific. We find that the effects of absolute and relative incomes are strong and relatively similar for both genders. Finally, we analyze the importance of “joy of winning”, i.e., the impact of outperforming another subject. Our results suggest that the mere fact of outperforming the other subject positively affects reward related brain areas.

Suggested Citation

  • Dohmen, Thomas & Falk, Armin & Fliessbach, Klaus & Sunde, Uwe & Weber, Bernd, 2011. "Relative versus absolute income, joy of winning, and gender: Brain imaging evidence," Journal of Public Economics, Elsevier, vol. 95(3), pages 279-285.
    • Handle: RePEc:eee:pubeco:v:95:y:2011:i:3:p:279-285
    DOI: 10.1016/j.jpubeco.2010.11.025
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