Advanced Search
MyIDEAS: Login to save this paper or follow this series

Individual Well-Being in a Dynamic Perspective

Contents:

Author Info

  • Conchita D’Ambrosio

    ()
    (Università di Milano-Bicocca and DIW Berlin)

  • Joachim R. Frick

    ()
    (DIW Berlin, TU Berlin and IZA Bonn)

Abstract

This paper explores the determinants of individual well-being as measured by self-reported levels of satisfaction with income. Making full use of the panel data nature of the German Socio-Economic Panel, we provide empirical evidence for well-being depending on absolute and on relative levels of income in a dynamic framework. This finding holds after controlling for other influential factors in a multivariate setting. The main novelty of the paper is the consideration of dynamic aspects: individual’s own history as well as the relative income performance with respect to the others living in the society under analysis do play a major role in the assessment of well-being.

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.ecineq.org/milano/WP/ECINEQ2007-64.pdf
Download Restriction: no

Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 64.

as in new window
Length: 23 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2007-64

Contact details of provider:
Email:
Web page: http://www.ecineq.org
More information through EDIRC

Related research

Keywords: Interdependent Preferences; Inequality Aversion; Status; Subjective Well-Being; SOEP.;

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. Andrew B. Abel, 1990. "Asset Prices under Habit Formation and Catching up with the Joneses," NBER Working Papers 3279, National Bureau of Economic Research, Inc.
  2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(3), pages 817-868, August.
  3. 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.
  4. Weiss, Yoram & Fershtman, Chaim, 1998. "Social status and economic performance:: A survey," European Economic Review, Elsevier, Elsevier, vol. 42(3-5), pages 801-820, May.
  5. Segal, Uzi & Sobel, Joel, 2007. "Tit for tat: Foundations of preferences for reciprocity in strategic settings," Journal of Economic Theory, Elsevier, Elsevier, vol. 136(1), pages 197-216, September.
  6. Kockesen, Levent & Ok, Efe A. & Sethi, Rajiv, 2000. "Evolution of Interdependent Preferences in Aggregative Games," Games and Economic Behavior, Elsevier, Elsevier, vol. 31(2), pages 303-310, May.
  7. Edi Karni & Zvi Safra, 2002. "Individual Sense of Justice: A Utility Representation," Econometrica, Econometric Society, Econometric Society, vol. 70(1), pages 263-284, January.
  8. Corneo, Giacomo & Jeanne, Olivier, 2001. " Status, the Distribution of Wealth, and Growth," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 103(2), pages 283-93, June.
  9. Efe A. Ok & Levent KoÚkesen, 2000. "Negatively interdependent preferences," Social Choice and Welfare, Springer, Springer, vol. 17(3), pages 533-558.
  10. Postlewaite, Andrew, 1998. "The social basis of interdependent preferences," European Economic Review, Elsevier, Elsevier, vol. 42(3-5), pages 779-800, May.
  11. Samuel Bowles & Yongjin Park, 2005. "Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 115(507), pages F397-F412, November.
  12. Chaim Fershtman & Yoram Weiss, 1991. "Social Status, Culture and Economic Performance," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1007, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. Hirschman, Albert O., 1973. "The changing tolerance for income inequality in the course of economic development," World Development, Elsevier, Elsevier, vol. 1(12), pages 29-36, December.
  14. Angelique Chan & Mary Ofstedal & Albert Hermalin, 2002. "Changes in Subjective and Objective Measures of Economic Well-Being and Their Interrelationship among the Elderly in Singapore and Taiwan," Social Indicators Research, Springer, Springer, vol. 57(3), pages 263-300, March.
  15. Pollak, Robert A, 1970. "Habit Formation and Dynamic Demand Functions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 78(4), pages 745-63, Part I Ju.
  16. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics, University of Munich, Department of Economics 14, University of Munich, Department of Economics.
  17. Itzhak Gilboa & David Schmeidler, 2001. "A cognitive model of individual well-being," Social Choice and Welfare, Springer, Springer, vol. 18(2), pages 269-288.
  18. Hamermesh, Daniel S., 1999. "The Changing Distribution of Job Satisfaction," IZA Discussion Papers 42, Institute for the Study of Labor (IZA).
  19. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
  20. Fershtman, C. & Weiss,Y., 1995. "Social Rewards, Externalities and Stable Preferences," Papers, Tel Aviv 32-95, Tel Aviv.
  21. Hey, John D & Lambert, Peter J, 1980. "Relative Deprivation and the Gini Coefficient: Comment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 95(3), pages 567-73, November.
  22. John Y. Campbell & John H. Cochrane, 1994. "By Force of Habit: A Consumption-Based Explanation of Aggregate Stock Market Behavior," CRSP working papers, Center for Research in Security Prices, Graduate School of Business, University of Chicago 412, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  23. Ravallion, Martin & Lokshin, Michael, 2000. "Identifying welfare effects from subjective questions," Policy Research Working Paper Series 2301, The World Bank.
  24. Gali, J., 1992. "Keeping Up with the Joneses: Consumption Externalities, Portfolio Choice and Asset Prices," Papers, Columbia - Graduate School of Business 92-22, Columbia - Graduate School of Business.
  25. Larry Samuelson, 2004. "Information-Based Relative Consumption Effects," Econometrica, Econometric Society, Econometric Society, vol. 72(1), pages 93-118, 01.
  26. Bester, Helmut & Guth, Werner, 1998. "Is altruism evolutionarily stable?," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 34(2), pages 193-209, February.
  27. BOSSERT, Walter & D’AMBROSIO, Conchita, 2005. "Dynamic Measures of Individual Deprivation," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 11-2005, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  28. Senik, Claudia, 2004. "When information dominates comparison: Learning from Russian subjective panel data," Journal of Public Economics, Elsevier, Elsevier, vol. 88(9-10), pages 2099-2123, August.
  29. Sethi, Rajiv & Somanathan, E., 2001. "Preference Evolution and Reciprocity," Journal of Economic Theory, Elsevier, Elsevier, vol. 97(2), pages 273-297, April.
  30. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(497), pages 641-659, 07.
  31. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, Elsevier, vol. 61(3), pages 359-381, September.
  32. Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Investigating the Patterns and Determinants of Life Satisfaction in Germany Following Reunification," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
  33. Tania Burchardt, 2005. "Are One Man’s Rags Another Man’s Riches? Identifying Adaptive Expectations using Panel Data," Social Indicators Research, Springer, Springer, vol. 74(1), pages 57-102, October.
  34. Konrad, Kai A., 1992. "Wealth seeking reconsidered," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 18(2), pages 215-227, July.
  35. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  36. Wunder, Christoph & Schwarze, Johannes, 2006. "Income Inequality and Job Satisfaction of Full-Time Employees in Germany," IZA Discussion Papers 2084, Institute for the Study of Labor (IZA).
  37. Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, Econometric Society, vol. 60(4), pages 837-57, July.
  38. Bill Dupor & Wen-Fang Liu, 2003. "Jealousy and Equilibrium Overconsumption," American Economic Review, American Economic Association, American Economic Association, vol. 93(1), pages 423-428, March.
  39. Collard, David, 1975. "Edgeworth's Propositions on Altruism," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 85(338), pages 355-60, June.
  40. Frick, Joachim R. & Goebel, Jan & Schechtman, Edna & Wagner, Gert G. & Yitzhaki, Shlomo, 2004. "Using Analysis of Gini (ANoGi) for Detecting Whether Two Sub-Samples Represent the Same Universe: The SOEP Experience," IZA Discussion Papers 1049, Institute for the Study of Labor (IZA).
  41. Brown, Gordon D. A. & Gardner, Jonathan & Oswald, Andrew J. & Qian, Jing, 2005. "Does Wage Rank Affect Employees' Wellbeing?," IZA Discussion Papers 1505, Institute for the Study of Labor (IZA).
  42. Harald Uhlig & Lars Ljungqvist, 2000. "Tax Policy and Aggregate Demand Management under Catching Up with the Joneses," American Economic Review, American Economic Association, American Economic Association, vol. 90(3), pages 356-366, June.
  43. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, American Economic Association, vol. 67(2), pages 76-90, March.
  44. Conchita D’Ambrosio & Joachim Frick, 2007. "Income Satisfaction and Relative Deprivation: An Empirical Link," Social Indicators Research, Springer, Springer, vol. 81(3), pages 497-519, May.
  45. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(3), pages 715-753, August.
  46. Schwarze, Johannes & Harpfer, Marco, 2007. "Are people inequality averse, and do they prefer redistribution by the state?: Evidence from German longitudinal data on life satisfaction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 36(2), pages 233-249, April.
  47. Yitzhaki, Shlomo, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 93(2), pages 321-24, May.
  48. William Neilson, 2006. "Axiomatic reference-dependence in behavior toward others and toward risk," Economic Theory, Springer, Springer, vol. 28(3), pages 681-692, 08.
  49. Andrew B. Abel, 2005. "Optimal Taxation when Consumers Have Endogenous Benchmark Levels of Consumption," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 21-42.
  50. Schall, Lawrence D, 1972. "Interdependent Utilities and Pareto Optimality," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 86(1), pages 19-24, February.
  51. Schwarze, Johannes & Härpfer, Marco, 2003. "Are People Inequality Averse, and Do They Prefer Redistribution by the State? A Revised Version," IZA Discussion Papers 974, Institute for the Study of Labor (IZA).
  52. Boskin, Michael J & Sheshinski, Eytan, 1978. "Optimal Redistributive Taxation when Individual Welfare Depends upon Relative Income," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 92(4), pages 589-601, November.
  53. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 111(473), pages 465-84, July.
  54. Corneo, Giacomo & Jeanne, Olivier, 1998. "Social organization, status, and savings behavior," Journal of Public Economics, Elsevier, Elsevier, vol. 70(1), pages 37-51, October.
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. Vendrik, Maarten C.M., 2013. "Adaptation, anticipation and social interaction in happiness: An integrated error-correction approach," Journal of Public Economics, Elsevier, Elsevier, vol. 105(C), pages 131-149.
  2. Andrew E. Clark & Conchita D'Ambrosio, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," PSE Working Papers halshs-00967938, HAL.
  3. Hodkinson, Brennan & Visser, Martine, 2013. "Effects of Objective and Subjective Income Comparisons on Subjective Wellbeing," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 118, Southern Africa Labour and Development Research Unit, University of Cape Town.
  4. Clark, Andrew E., 2011. "Happiness, Habits and High Rank: Comparisons in Economic and Social Life," IZA Discussion Papers 5966, Institute for the Study of Labor (IZA).
  5. Marco de Pinto, 2012. "The Redistribution of Trade Gains and the Equity-Efficiency Trade-Off," IAAEU Discussion Papers, Institute of Labour Law and Industrial Relations in the European Union (IAAEU) 201206, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  6. Veronika Bertram-Hümmer & Ghassan Baliki, 2014. "The Role of Visible Wealth for Deprivation," Discussion Papers of DIW Berlin 1392, DIW Berlin, German Institute for Economic Research.
  7. Adrian Chadi, 2013. "The Role of Interviewer Encounters in Panel Responses on Life Satisfaction," IAAEU Discussion Papers, Institute of Labour Law and Industrial Relations in the European Union (IAAEU) 201311, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  8. FitzRoy, Felix & Nolan, Michael A. & Steinhardt, Max & Ulph, David, 2013. "Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels," IZA Discussion Papers 7452, Institute for the Study of Labor (IZA).
  9. Adrian Chadi, 2014. "Dissatisfied with Life or with Being Interviewed? Happiness and Motivation to Participate in a Survey," SOEPpapers on Multidisciplinary Panel Data Research 639, DIW Berlin, The German Socio-Economic Panel (SOEP).
  10. Stefano Bartolini & Ennio Bilancini & Francesco Sarracino, 2011. "Predicting the Trend of Well-Being in Germany: How Much Do Comparisons, Adaptation and Sociability Matter?," SOEPpapers on Multidisciplinary Panel Data Research 414, DIW Berlin, The German Socio-Economic Panel (SOEP).
  11. Hyll, Walter & Schneider, Lutz, 2014. "Relative deprivation and migration preferences," Economics Letters, Elsevier, Elsevier, vol. 122(2), pages 334-337.
  12. Santiago Budria, 2013. "Are Relative-Income Effects Constant Across the Well-Being Distribution?," Journal of Happiness Studies, Springer, Springer, vol. 14(4), pages 1379-1408, August.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. SOEP based publications

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:inq:inqwps:ecineq2007-64. 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: (Maria Ana Lugo).

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.