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When Information Dominates Comparison: A Panel Data Analysis Using Russian Subjective Data

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Author Info
Claudia Senik ()

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Abstract

We propose a micro-econometric investigation into the relation between subjective life satisfaction and income distribution, using a balanced panel survey of the Russian population (RLMS), running from 1994 to 2000, including 4096 individuals. We show that in the context of the Russian very volatile environment, Hirschman’s (1973) “tunnel effect” conjecture seems to be validated : variables reflecting income distribution do not influence satisfaction through social comparisons; individuals rather seem to use their informational content in order to form their expectations. The reference group’s income exerts a positive influence on individual satisfaction, which contrasts with other studies on the subject. Inequality indices do not affect individual welfare.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 495.

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Handle: RePEc:wdi:papers:2002-495

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Related research
Keywords: subjective welfare; relative income; inequality; transition; panel data;

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Find related papers by JEL classification:
I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
D60 - Microeconomics - - Welfare Economics - - - General
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

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References listed on IDEAS
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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. Andrew E. Clark, 2008. "Happiness, habits and high rank: Comparisons in economic and social life," PSE Working Papers 2008-61, PSE (Ecole normale supérieure). [Downloadable!]
  2. Andrew Clark & Andreas Knabe & Steffen Rätzel, 2008. "Boon or Bane?: Others' Unemployment, Well-Being and Job Insecurity," SOEPpapers 153, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
  3. David G. Blanchflower & Andrew J. Oswald, 2004. "Money, Sex, and Happiness: An Empirical Study," NBER Working Papers 10499, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Andrew Clark, 2003. "Inequality-Aversion and Income Mobility: A Direct Test," DELTA Working Papers 2003-11, DELTA (Ecole normale supérieure). [Downloadable!]
  5. Paul Frijters & Amy Y.C. Liu & Xin Meng, 2008. "Are optimistic expectations keeping the Chinese happy?," NCER Working Paper Series 37, National Centre for Econometric Research. [Downloadable!]
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