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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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    1. Kingdon, Geeta Gandhi & Knight, John, 2007. "Community, comparisons and subjective well-being in a divided society," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 69-90, September.
    2. 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.
    3. van Hoorn, André & Mabsout, Ramzi & Sent, Esther-Mirjam, 2010. "Happiness and capability: Introduction to the symposium," The Journal of Socio-Economics, Elsevier, vol. 39(3), pages 339-343, June.
    4. 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.
    5. 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.
    6. Geeta Gandhi Kingdon & John Knight, 2006. "Subjective well-being poverty vs. Income poverty and capabilities poverty?," The Journal of Development Studies, Taylor and Francis Journals, vol. 42(7), pages 1199-1224.
    7. 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.
    8. Erzo F.P. Luttmer, 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," NBER Working Papers 10667, National Bureau of Economic Research, Inc.
    9. Angner, Erik, 2010. "Subjective well-being," The Journal of Socio-Economics, Elsevier, vol. 39(3), pages 361-368, June.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
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