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Relative standing and subjective well-being in South Africa: The role of perceptions, expectations and income mobility

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  • Dorrit Posel
  • Daniela Casale
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    Abstract

    Most studies that explore the impact of relative standing on subjective well-being use objective measures of the individual’s relative position, such as the mean income of the reference group or the individual’s ranking in the relevant income distribution. In this paper, using a new household survey from South Africa, we are able to derive subjective measures of relative standing, as information is collected on individuals’ perceptions of where they rank in the income distribution. We find considerable differences between objective and subjective measures of an individual’s relative ranking. Furthermore, our results suggest that an individual’s perceived relative status has a significantly larger effect on subjective well-being than objective measures of relative status based on reported income. We also examine the effects on subjective well-being of how individuals perceive their relative position in the income distribution to have changed since childhood, and what they expect their relative position to be in the future. We find that future upward mobility has a smaller effect than upward mobility compared to one’s past, suggesting that life satisfaction is influenced more by what has been achieved than by anticipated achievements.

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    Bibliographic Info

    Paper provided by Economic Research Southern Africa in its series Working Papers with number 210.

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    Length: 28 pages
    Date of creation: 2011
    Date of revision:
    Handle: RePEc:rza:wpaper:210

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    Keywords: subjective well-being; relative standing; perceptions; expectations; income mobility; South Africa;

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    References

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    1. Timothy Hinks & Carola Gruen, 2007. "What is the Structure of South African Happiness Equations? Evidence from Quality of Life Surveys," Social Indicators Research, Springer, vol. 82(2), pages 311-336, June.
    2. 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.
    3. Daniel Neff, 2007. "Subjective Well-Being, Poverty and Ethnicity in South Africa: Insights from an Exploratory Analysis," Social Indicators Research, Springer, vol. 80(2), pages 313-341, January.
    4. Jeffrey Bookwalter & Douglas Dalenberg, 2004. "Subjective Well-Being and Household Factors in South Africa," Social Indicators Research, Springer, vol. 65(3), pages 333-353, February.
    5. Bookwalter, Jeffrey T. & Dalenberg, Douglas R., 2010. "Relative to What or Whom? The Importance of Norms and Relative Standing to Well-Being in South Africa," World Development, Elsevier, vol. 38(3), pages 345-355, March.
    6. Helliwell, John F., 2003. "How's life? Combining individual and national variables to explain subjective well-being," Economic Modelling, Elsevier, vol. 20(2), pages 331-360, March.
    7. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 963-1002, August.
    8. Geeta G. Kingdon & John Knight, 2004. "Community, Comparisons and Subjective Well-being in a Divided Society," CSAE Working Paper Series 2004-21, Centre for the Study of African Economies, University of Oxford.
    9. Nattavudh Powdthavee, 2003. "Are there Regional Variations in the Psychological Cost of Unemployment in South Africa?," Labor and Demography 0310006, EconWPA, revised 28 Oct 2003.
    10. Jeffrey Bookwalter & Brandon Fuller & Douglas Dalenberg, 2006. "Do Household Heads Speak for the Household? A Research Note," Social Indicators Research, Springer, vol. 79(3), pages 405-419, December.
    11. van Hoorn, André & Mabsout, Ramzi & Sent, Esther-Mirjam, 2010. "Happiness and capability: Introduction to the symposium," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(3), pages 339-343, June.
    12. 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.
    13. Geeta Gandhi Kingdon & John Knight, 2006. "Subjective well-being poverty vs. Income poverty and capabilities poverty?," Journal of Development Studies, Taylor & Francis Journals, vol. 42(7), pages 1199-1224.
    14. Angner, Erik, 2010. "Subjective well-being," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(3), pages 361-368, June.
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    Cited by:
    1. Finn, Arden & Leibbrandt, Murray, 2013. "Mobility and Inequality in the First Three Waves of NIDS," SALDRU Working Papers 120, Southern Africa Labour and Development Research Unit, University of Cape Town.
    2. Akay, Alpaslan & Andersson, Lisa & Martinsson, Peter & Medhin, Haileselassie, 2014. "Positional Concerns among the Poor: Does Reference Group Matter? Evidence from Survey Experiments," IZA Discussion Papers 8215, Institute for the Study of Labor (IZA).
    3. Ferdi Botha, 2012. "The Economics Of Suicide In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 80(4), pages 526-552, December.

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