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Hedonic Adaptation to Living Standards and the Hidden Cost of Parental Income

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Author Info

  • Stefan Boes

    ()
    (Socioeconomic Institute, University of Zurich)

  • Kevin Staub

    ()
    (Socioeconomic Institute, University of Zurich)

  • Rainer Winkelmann

    ()
    (Economics Division, Federal Research Institute WSL, Birmensdorf, Switzerland)

Abstract

High parental income, while undeniably causing beneÞts for a child in terms of better access to education and more favorable labor market outcomes, may at the same time increase a childÕs income aspirations and thereby reduce Þnancial satisfaction, ceteris paribus. In this paper, we investigate the relationship between Þnancial satisfaction and parental income with data from the German Socio-Economic Panel. The results indicate that there is indeed a negative well-being externality of parental income, and that children appear to compare their actual income situation with the aspiration level acquired while growing up.

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File URL: http://www.soi.uzh.ch/research/wp/2007/wp0713.pdf
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Bibliographic Info

Paper provided by Socioeconomic Institute - University of Zurich in its series SOI - Working Papers with number 0713.

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Length: 18 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:soz:wpaper:0713

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Keywords: Welfare; happiness; income norm; subjective well-being;

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Cited by:
  1. Donja Darai & Dario Sacco & Armin Schmutzler, 2010. "Competition and innovation: an experimental investigation," Experimental Economics, Springer, vol. 13(4), pages 439-460, December.
  2. Andrew Clark & Nathalie Colombier & David Masclet, 2008. "Never the same after the first time: the satisfaction of the second-generation self-employed," International Journal of Manpower, Emerald Group Publishing, vol. 29(7), pages 591-609, November.
  3. Ilja Neustadt & Peter Zweifel, 2009. "Economic Well-Being, Social Mobility, and Preferences for Income Redistribution: Evidence from a Discrete Choice Experiment," SOI - Working Papers 0909, Socioeconomic Institute - University of Zurich, revised Jan 2010.
  4. Adrian Bruhin, 2008. "Stochastic Expected Utility and Prospect Theory in a Horse Race: A Finite Mixture Approach," SOI - Working Papers 0803, Socioeconomic Institute - University of Zurich.
  5. Maurus Rischatsch & Maria Trottmann, 2009. "Physician dispensing and the choice between generic and brand-name drugs – Do margins affect choice?," SOI - Working Papers 0911, Socioeconomic Institute - University of Zurich.
  6. Dennis Gaertner, 2007. "Monopolistic Screening under Learning By Doing," SOI - Working Papers 0718, Socioeconomic Institute - University of Zurich.
  7. Dennis Gaertner, 2007. "Why Bayes Rules: A Note on Bayesian vs. Classical Inference in Regime Switching Models," SOI - Working Papers 0719, Socioeconomic Institute - University of Zurich.
  8. Johannes Schoder & Peter Zweifel, 2008. "Managed Care Konzepte und Lösungsansätze– Ein internationaler Vergleich aus schweizerischer Sicht," SOI - Working Papers 0801, Socioeconomic Institute - University of Zurich.
  9. Andrew E. Clark & Nathalie Colombier & David Masclet, 2008. "Never the same after the first time: The satisfaction of the second-generation self-employed," Working Papers halshs-00586826, HAL.
  10. Maurus Rischatsch, 2009. "Simulating WTP Values from Random-Coefficient Models," SOI - Working Papers 0912, Socioeconomic Institute - University of Zurich.
  11. Falkinger, Josef, 2008. "Between Agora and Shopping Mall," IZA Discussion Papers 3524, Institute for the Study of Labor (IZA).
  12. Dario Sacco & Armin Schmutzler, 2008. "All-Pay Auctions with Negative Prize Externalities: Theory and Experimental Evidence," SOI - Working Papers 0806, Socioeconomic Institute - University of Zurich.
  13. Sandra Hanslin, 2008. "The effect of trade openness on optimal government size under endogenous firm entry," SOI - Working Papers 0802, Socioeconomic Institute - University of Zurich.

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