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Who cares about relative deprivation ?

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Author Info
Ravallion, Martin
Lokshin, Michael

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Abstract

Theories of relative deprivation predict negative welfare effects when friends and neighbors become better-off. Other theories point to likely positive benefits. The authors encompass both views within a single model, which motivates their tests using a survey for Malawi that collected data on satisfaction with life, own economic welfare, and the perceived welfare of friends and neighbors. Their methods help address likely biases in past tests found in the literature. In marked contrast to research for industrial countries, the authors find that relative deprivation is generally not a concern for most of their sample, although it does appear to matter to the comparatively well off. Their results provide a welfarist explanation for the priority given to absolute poverty in poor countries. The pattern of externalities also suggests that there will be too much poverty and inequality in this economy, even judged solely from the point of view of aggregate efficiency.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3782.

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Date of creation: 01 Dec 2005
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Handle: RePEc:wbk:wbrwps:3782

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Keywords: Economic Theory&Research; Poverty Diagnostics; Inequality; Biodiversity; Insurance&Risk Mitigation;

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  21. Maitra, P. & Ray, R., 1999. "The Effect of Transfers on Household Expenditure Patterns and Poverty in South Africa," Papers 99-16, Sydney - Department of Economics.
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  22. Ravallion, Martin & Lokshin, Michael, 2002. "Self-rated economic welfare in Russia," European Economic Review, Elsevier, vol. 46(8), pages 1453-1473, September. [Downloadable!] (restricted)
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  26. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Fafchamps, Marcel & Shilpi, Forhad, 2006. "Subjective Welfare, Isolation and Relative Consumption," CEPR Discussion Papers 6002, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Van Landeghem, Bert & Swinnen, Johan & Vranken, Liesbet, 2008. "Land and Happiness: Land Distribution and Subjective Well-Being in Moldova," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44375, European Association of Agricultural Economists. [Downloadable!]
  3. Ravallion, Martin & Chen, Shaohua & Sangraula, Prem, 2008. "Dollar a day revisited," Policy Research Working Paper Series 4620, The World Bank. [Downloadable!]
  4. Chen, Shaohua & Ravallion, Martin, 2007. "Absolute poverty measures for the developing world, 1981-2004," Policy Research Working Paper Series 4211, The World Bank. [Downloadable!]
  5. Pérez Truglia, Ricardo Nicolás, 2007. "Can a rise in income inequality improve welfare?," MPRA Paper 4700, University Library of Munich, Germany, revised 22 Dec 2007. [Downloadable!]
  6. Demirguc-Kunt, Asli & Klapper, Leora F. & Panos, Georgios A., 2009. "Entrepreneurship in post-conflict transition : the role of informality and access to finance," Policy Research Working Paper Series 4935, The World Bank. [Downloadable!]
  7. John Knight & Ramani Gunatilaka, 2009. "Is Happiness Infectious?," Economics Series Working Papers 446, University of Oxford, Department of Economics. [Downloadable!]
  8. Ravallion, Martin & Chen, Shaohua & Sangraula, Prem, 2007. "New evidence on the urbanization of global poverty," Policy Research Working Paper Series 4199, The World Bank. [Downloadable!]
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