We contribute to the literature on well-being and comparisons by appealing to new Danish data dividing the country up into around 9,000 small neighbourhoods. Administrative data provides us with the income of every person in each of these neighbourhoods. This income information is matched to demographic and economic satisfaction variables from eight years of Danish ECHP data. Panel regression analysis shows that, conditional on own household income, respondents report higher satisfaction levels when their neighbours are richer. However, individuals are rank-sensitive: Conditional on one's own income and neighbourhood median income, respondents are more satisfied as their percentile neighbourhood ranking improves. A ten percentage point rise in rank (i.e., from 40th to 20th position in a 200-household cell) is worth 0.11 on a 1-6 scale, which is a large marginal effect in satisfaction terms. (JEL: C23, C25, D84, J28, J31) (c) 2009 by the European Economic Association.
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Volume (Year): 7 (2009) Issue (Month): 2-3 (04-05) Pages: 519-527 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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