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Relative Deprivation, Personal Income Satisfaction, and Average Well-being under Different Income Distributions

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  • Seidl, Christian
  • Traub, Stefan
  • Morone, Andrea

Abstract

This paper uses the data gained from an income categorization experiment for five shapes of income distributions to investigate background context effects, relative deprivation, range-frequency theory to explain back-ground context effects,individual income satisfaction versus aggregate well-being, and the dual patterns of income categorization and limen setting. It is shown that background context effects exist and are reected in relative deprivation. Not all precepts of range-frequency theory can be evidenced. Moreover, we demonstrate a welfare paradox which concerns a contradiction between individual income satisfaction and aggregate well-being. Finally, income categorization and limen setting harbor no response-mode effects, but exhibit conformity.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/rp2005/rp2005-04.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number RP2005/04.

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Length: 44 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:unu:wpaper:rp2005-04

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Keywords: relative deprivation; income distributions; income satisfaction; context effects;

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References

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  1. Herwaarden, F.G. van & Kapteyn, A.J., 1979. "Empirical comparison of the shape of welfare functions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-361905, Tilburg University.
  2. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 11(3), pages 337-369.
  3. Donald Green & Karen Jacowitz & Daniel Kahneman & Daniel McFadden, 1995. "Referendum Contingent Valuation, Anchoring, and Willingness to Pay for Public Goods," Working Papers _010, University of California at Berkeley, Econometrics Laboratory Software Archive.
  4. Seidl, Christian, 1994. "How sensible is the Leyden individual welfare function of income?," European Economic Review, Elsevier, vol. 38(8), pages 1633-1659, October.
  5. Seidl, Christian & Camacho Cuena, Eva & Morone, Andrea, 2003. "Income Distributions versus Lotteries Happiness, Response-Mode Effects, and Preference," Economics Working Papers 2003,01, Christian-Albrechts-University of Kiel, Department of Economics.
  6. Edward L. Glaeser & Bruce Sacerdote, 2000. "The Determinants of Punishment: Deterrence, Incapacitation and Vengeance," NBER Working Papers 7676, National Bureau of Economic Research, Inc.
  7. Van Praag, Bernard M. S. & Kapteyn, Arie, 1973. "Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands," European Economic Review, Elsevier, vol. 4(1), pages 33-62, April.
  8. Steven R. Beckman & Buhong Zheng & John P. Formby & W. James Smith, 2002. "Envy, malice and Pareto efficiency: An experimental examination," Social Choice and Welfare, Springer, vol. 19(2), pages 349-367.
  9. Seidl, Christian, 2002. " Preference Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 621-55, December.
  10. Kurt Devooght, 2002. "Measuring Inequality by Counting Complaints: Theory and Empirics," STICERD - Distributional Analysis Research Programme Papers, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE 59, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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Citations

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Cited by:
  1. Poggi, Ambra, 2014. "Within-establishment wage inequality and satisfaction," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 8(4), pages 1-21.
  2. Poggi, Ambra, 2013. "Within-establishment wage inequality and satisfaction," Economics Discussion Papers 2013-28, Kiel Institute for the World Economy.
  3. Seidl, Christian & Camacho Cuena, Eva & Morone, Andrea, 2003. "Income Distributions versus Lotteries Happiness, Response-Mode Effects, and Preference," Economics Working Papers 2003,01, Christian-Albrechts-University of Kiel, Department of Economics.
  4. Morone, Andrea & Ozdemir, Ozlem, 2012. "Black swan protection: an experimental investigation," MPRA Paper 38842, University Library of Munich, Germany.
  5. Krzysztof Zagorski & Mariah Evans & Jonathan Kelley & Katarzyna Piotrowska, 2014. "Does National Income Inequality Affect Individuals’ Quality of Life in Europe? Inequality, Happiness, Finances, and Health," Social Indicators Research, Springer, vol. 117(3), pages 1089-1110, July.
  6. Tim Krieger & Stefan Traub, 2008. "Back to Bismarck? Shifting Preferences for Intragenerational Redistribution in OECD Pension Systems," Working Papers CIE 13, University of Paderborn, CIE Center for International Economics.
  7. repec:pdn:wpaper:13 is not listed on IDEAS
  8. Camacho-Cuena, Eva & Seidl, Christian & Morone, Andrea, 2005. "Comparing preference reversal for general lotteries and income distributions," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 682-710, October.
  9. Zagórski, K. & Piotrowska, K., 2013. "GINI DP 66: Income Inequality in Nations and Sub- national Regions, Happiness and Economic Attitudes," GINI Discussion Papers 66, AIAS, Amsterdam Institute for Advanced Labour Studies.
  10. 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).

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