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Community, Comparisons and Subjective Well-being in a Divided Society

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Author Info
Geeta Kingdon
John Knight () (Department of Economics, University of Oxford)

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Abstract

Using a South African data set, the paper poses six questions about the determinants of subjective well-being. Much of the paper is concerned with the role of relative concepts. We find that comparator income – measured as average income of others in the local residential cluster – enters the household’s utility function positively but that income of more distant others (others in the district or province) enters negatively. The ordered probit equations indicate that, as well as comparator groups based on spatial proximity, race-based comparator groups are important in the racially divided South African society. It is also found that relative income is more important to happiness at higher levels of absolute income. Potential explanations of these results, and their implications, are considered.

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File URL: http://www.commerce.uct.ac.za/Research_Units/dpru/WorkingPapers/PDF_Files/WP_05-95.pdf
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File Function: First version, 2005
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Publisher Info
Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 9628.

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Length: 29 pages
Date of creation: Jul 2005
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Publication status: Published in Working Paper Series by the Development Policy Research Unit, July 2005, pages 1-29
Handle: RePEc:ctw:wpaper:9628

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Related research
Keywords: South Africa: poverty; well-being; absolute income; household’s utility function;

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A1 - General Economics and Teaching - - General Economics

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References listed on IDEAS
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    Other versions:
  16. Ligon, Ethan & Thomas, Jonathan P & Worrall, Tim, 2002. "Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies," Review of Economic Studies, Blackwell Publishing, vol. 69(1), pages 209-44, January.
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  19. John F. Helliwell, 2002. "How's Life? Combining Individual and National Variables to Explain Subjective Well-Being," NBER Working Papers 9065, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July. [Downloadable!] (restricted)
  21. Bowles, Samuel & Gintis, Herbert, 2004. "Persistent parochialism: trust and exclusion in ethnic networks," Journal of Economic Behavior & Organization, Elsevier, vol. 55(1), pages 1-23, September. [Downloadable!] (restricted)
  22. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-91, May. [Downloadable!] (restricted)
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  23. Carol Graham & Stefano Pettinato, 2002. "Frustrated achievers: winners, losers and subjective well-being in new market economies," The Journal of Development Studies, Taylor and Francis Journals, vol. 38(4), pages 100-140, April. [Downloadable!] (restricted)
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