Advanced Search
MyIDEAS: Login

The Power of Positional Concerns: A Panel Analysis

Contents:

Author Info

  • Benno Torgler
  • Sascha L. Schmidt
  • Bruno S. Frey

Abstract

Many studies have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. However, behavioral evidence is rare. This paper provides an empirical analysis on how individuals? relative income position affects their performance. Using a unique data set for 1040 soccer players over a period of eight seasons, our analysis suggests that the larger the income differences within a team, the worse the performance of the soccer players is. The more the players are integrated in a particular social environment (their team), the more evident this negative effect is. Moreover, we find that positional effects lowering performance are stronger among high performing teams.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.crema-research.ch/papers/2006-19.pdf
File Function: Full Text
Download Restriction: no

File URL: http://www.crema-research.ch/abstracts/2006-19.htm
File Function: Abstract
Download Restriction: no

Bibliographic Info

Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2006-19.

as in new window
Length:
Date of creation: May 2006
Date of revision:
Handle: RePEc:cra:wpaper:2006-19

Contact details of provider:
Postal: Gellerstrasse 24, 4052 Basel
Email:
Web page: http://www.crema-research.ch
More information through EDIRC

Related research

Keywords: Relative income; positional concerns; envy; performance; social integration;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Bruno S. Frey, 2005. "Knight Fever – Towards an Economics of Awards," CESifo Working Paper Series 1468, CESifo Group Munich.
  2. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  3. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2005. "How much do we care about absolute versus relative income and consumption?," Journal of Economic Behavior & Organization, Elsevier, vol. 56(3), pages 405-421, March.
  4. Benno Torgler, 2004. "The Economics of the FIFA Football Worldcup," Kyklos, Wiley Blackwell, vol. 57(2), pages 287-300, 05.
  5. O'Keeffe, Mary & Viscusi, W Kip & Zeckhauser, Richard J, 1984. "Economic Contests: Comparative Reward Schemes," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 27-56, January.
  6. Robert Gibbons & Kevin Murphy, 1989. "Relative Performance Evaluation for Chief Executive Officers," Working Papers 628, Princeton University, Department of Economics, Industrial Relations Section..
  7. Wim Groot & Henriette Maassen Van Den Brink, 1999. "Overpayment and earnings satisfaction: an application of an ordered response Tobit Model," Applied Economics Letters, Taylor & Francis Journals, vol. 6(4), pages 235-238.
  8. Boskin, Michael J & Sheshinski, Eytan, 1978. "Optimal Redistributive Taxation when Individual Welfare Depends upon Relative Income," The Quarterly Journal of Economics, MIT Press, vol. 92(4), pages 589-601, November.
  9. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
  10. Alois Stutzer, . "The Role of Income Aspirations in Individual Happiness," IEW - Working Papers 124, Institute for Empirical Research in Economics - University of Zurich.
  11. Sunde, Uwe, 2003. "Potential, Prizes and Performance: Testing Tournament Theory with Professional Tennis Data," IZA Discussion Papers 947, Institute for the Study of Labor (IZA).
  12. Alastair R. Hall & Glenn D. Rudebusch & David W. Wilcox, 1994. "Judging instrument relevance in instrumental variables estimation," Finance and Economics Discussion Series 94-3, Board of Governors of the Federal Reserve System (U.S.).
  13. S. M. Dobson & J. A. Goddard, 1998. "Performance and revenue in professional league football: evidence from Granger causality tests," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1641-1651.
  14. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2003. "Projection Bias In Predicting Future Utility," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1209-1248, November.
  15. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
  16. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November.
  17. Bruno S. Frey & Margit Osterloh, . "Yes, Managers Should be Paid Like Bureaucrats," IEW - Working Papers 187, Institute for Empirical Research in Economics - University of Zurich.
  18. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-64, April.
  19. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-64, October.
  20. Olof Johansson-Stenman & Fredrik Carlsson & Dinky Daruvala, 2002. "Measuring Future Grandparents" Preferences for Equality and Relative Standing," Economic Journal, Royal Economic Society, vol. 112(479), pages 362-383, April.
  21. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
  22. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  23. Breusch, T.S. & Pagan, A.R., . "The Lagrange multiplier test and its applications to model specification in econometrics," CORE Discussion Papers RP -412, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  24. Ronald G. Ehrenberg & Michael L. Bognanno, 1988. "Do Tournaments Have Incentive Effects?," NBER Working Papers 2638, National Bureau of Economic Research, Inc.
  25. Luttmer, Erzo F. P., 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," Working Paper Series rwp04-029, Harvard University, John F. Kennedy School of Government.
  26. Andrew E. Clark and Andrew J. Oswald, . "Satisfaction and Comparison Income," Economics Discussion Papers 419, University of Essex, Department of Economics.
  27. Pollak, Robert A, 1976. "Interdependent Preferences," American Economic Review, American Economic Association, vol. 66(3), pages 309-20, June.
  28. John Shea, 1997. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 348-352, May.
  29. Stephen Hall & Stefan Szymanski & Andrew S. Zimbalist, 2002. "Testing the Causality between Team Performance and Payroll: The Cases of Major League Baseball and English Soccer," Journal of Sports Economics, , vol. 3(2), pages 149-168, May.
  30. Pedro Garcia-del-Barrio & Francesc Pujol, 2004. "Pay and Performance in the Spanish Soccer League: Who Gets the Expected Monopsony Rents?," Faculty Working Papers 05/04, School of Economics and Business Administration, University of Navarra.
  31. Carmichael, Fiona & Forrest, David & Simmons, Robert, 1999. "The Labour Market in Association Football: Who Gets Transferred and For How Much?," Bulletin of Economic Research, Wiley Blackwell, vol. 51(2), pages 125-50, April.
  32. Jean-Marie Dufour, 2003. "Identification, weak instruments, and statistical inference in econometrics," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 767-808, November.
  33. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
  34. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-58, December.
  35. Jerry R. Green & Nancy L. Stokey, 1982. "A Comparison of Tournaments and Contracts," NBER Working Papers 0840, National Bureau of Economic Research, Inc.
  36. Edward P. Lazear, 1996. "Performance Pay and Productivity," NBER Working Papers 5672, National Bureau of Economic Research, Inc.
  37. Bruno S. Frey & Benno Torgler, 2004. "Taxation and Conditional Cooperation," CREMA Working Paper Series 2004-20, Center for Research in Economics, Management and the Arts (CREMA).
  38. Orszag, Jonathan M., 1994. "A new look at incentive effects and golf tournaments," Economics Letters, Elsevier, vol. 46(1), pages 77-88, September.
  39. Yew-Kwang Ng, 2003. "From preference to happiness: Towards a more complete welfare economics," Social Choice and Welfare, Springer, vol. 20(2), pages 307-350, March.
  40. McBride, Michael, 2001. "Relative-income effects on subjective well-being in the cross-section," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 251-278, July.
  41. Meng-Wen Tsou & Jin-Tan Liu, 2001. "Happiness and Domain Satisfaction in Taiwan," Journal of Happiness Studies, Springer, vol. 2(3), pages 269-288, September.
  42. Michael T. Maloney & Robert E. McCormick, 2000. "The Response of Workers to Wages in Tournaments," Journal of Sports Economics, , vol. 1(2), pages 99-123, May.
  43. Frey, Bruno S. & Meier, Stephan, 2004. "Pro-social behavior in a natural setting," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 65-88, May.
  44. Kirchsteiger, Georg, 1994. "The role of envy in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 373-389, December.
  45. Idson, T. & Kahane, L.H., 1995. "Team Effects on Compensation : An Application to Salary Determinantion in the National Hokey League," Discussion Papers 1995_14, Columbia University, Department of Economics.
  46. Ng, Yew-Kwang, 1997. "A Case for Happiness, Cardinalism, and Interpersonal Comparability," Economic Journal, Royal Economic Society, vol. 107(445), pages 1848-58, November.
  47. Landers, Renee M & Rebitzer, James B & Taylor, Lowell J, 1996. "Rat Race Redux: Adverse Selection in the Determination of Work Hours in Law Firms," American Economic Review, American Economic Association, vol. 86(3), pages 329-48, June.
  48. Ronald G. Ehrenberg & Michael L. Bognanno, 1990. "The incentive effects of tournaments revisited: Evidence from the European PGA tour," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(3), pages 74-88, February.
  49. Ng, Yew-Kwang, 1987. "Relative-Income Effects and the Appropriate Level of Public Expenditure," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 293-300, June.
  50. Benno Torgler, 2004. "?La Grande Boucle?: Determinants of Success at the Tour de France," CREMA Working Paper Series 2004-22, Center for Research in Economics, Management and the Arts (CREMA), revised May 2005.
  51. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
  52. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  53. Erik E. Lehmann & Günther G. Schulze, 2007. "What does it take to be a star? The role of performance and the media for German soccer players," Discussion Paper Series 1, Department of International Economic Policy, University of Freiburg, revised Mar 2008.
  54. James G. Lynch & Jeffrey S. Zax, 2000. "The Rewards to Running," Journal of Sports Economics, , vol. 1(4), pages 323-340, November.
  55. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
  56. Claudio Lucifora & Rob Simmons, 2003. "Superstar Effects in Sport: Evidence From Italian Soccer," Journal of Sports Economics, , vol. 4(1), pages 35-55, February.
  57. John M. Abowd, 1990. "Does performance-based managerial compensation affect corporate performance?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(3), pages 52-73, February.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Justina A.V. Fischer & Benno Torgler, 2007. "Social Capital and Relative Income Concerns: Evidence from 26 Countries," CREMA Working Paper Series 2007-05, Center for Research in Economics, Management and the Arts (CREMA).
  2. Justina A V Fischer & Benno Torgler, 2011. "Do Positional Concerns Destroy Social Capital: Evidence from 26 Countries," School of Economics and Finance Discussion Papers and Working Papers Series 265, School of Economics and Finance, Queensland University of Technology.
  3. Lampi, Elina & Nordblom, Katarina, 2010. "Money and success - Sibling and birth-order effects on positional concerns," Journal of Economic Psychology, Elsevier, vol. 31(1), pages 131-142, February.
  4. Martin Gächter & David A. Savage & Benno Torgler, 2013. "Retaining the thin blue line: What shapes workers' intentions not to quit the current work environment," International Journal of Social Economics, Emerald Group Publishing, vol. 40(5), pages 479-503, May.
  5. David Stadelmann & Reiner Eichenberger, 2008. "Wer ist der beste Formel 1 Fahrer? Eine ökonometrische Talentbewertung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(4), pages 486-512, November.
  6. Markus Schaffner & Benno Torgler, 2008. "Meet the Joneses: An Empirical Investigation of Reference Groups in Relative Income Position Comparisons," School of Economics and Finance Discussion Papers and Working Papers Series 234, School of Economics and Finance, Queensland University of Technology, revised 17 Jun 2008.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cra:wpaper:2006-19. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna-Lea Werlen).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.