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Relative Income Position and Performance: An Empirical Panel Analysis

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  • Benno Torgler

    (Yale Center for International and Area Studies)

  • Sascha L. Schmidt

    (University of St. Gallen)

  • Bruno S. Frey

    (University of Zurich)

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 1114 soccer players over a period of eight seasons (2833 observations), 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.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.39.

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Date of creation: Feb 2006
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Handle: RePEc:fem:femwpa:2006.39

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Keywords: Relative Income; Positional Concerns; Envy; Performance; Social Integration;

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Cited by:
  1. Cornelissen, Thomas & Pfeifer, Christian, 2007. "The Impact of Participation in Sports on Educational Attainment: New Evidence from Germany," IZA Discussion Papers 3160, Institute for the Study of Labor (IZA).
  2. Dr Alex Bryson, 2009. "The Returns to Scarce Talent: Footedness and Player Remuneration in European Soccer," NIESR Discussion Papers 2395, National Institute of Economic and Social Research.
  3. Mario Mechtel & Tim Friehe, 2014. "Gambling to Leapfrog in Status?," IAAEU Discussion Papers 201404, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  4. Justina A. V. Fischer & Benno Torgler, 2006. "Does envy destroy social fundamentals? The impact of relative income position on social capital," LSE Research Online Documents on Economics 6640, London School of Economics and Political Science, LSE Library.
  5. Johannes Abeler & Steffen Altmann & Sebastian Kube & Matthias Wibral, 2010. "Gift Exchange and Workers' Fairness Concerns: When Equality is Unfair," Journal of the European Economic Association, MIT Press, vol. 8(6), pages 1299-1324, December.
  6. Abeler, Johannes & Altmann, Steffen & Kube, Sebastian & Wibral, Matthias, 2006. "Reciprocity and Payment Schemes: When Equality Is Unfair," Ratio Working Papers 109, The Ratio Institute.
  7. Tim Friehe & Mario Mechtel, 2012. "Conspicuous Consumption and Communism: Evidence from East and West Germany," CESifo Working Paper Series 3922, CESifo Group Munich.
  8. Baumann, Florian & Friehe, Tim, 2013. "Status concerns as a motive for crime?," DICE Discussion Papers 93, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  9. Saima Naeem & Asad Zaman, 2013. "For Love or Money? Motivating Workers," PIDE-Working Papers 2013:90, Pakistan Institute of Development Economics.

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