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Relative deprivation, reference groups and the assessment of standard of living

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  • Silber, Jacques
  • Verme, Paolo

Abstract

This paper proposes two new indices of relative deprivation, derived from an extension of the concept of generalized Gini to the measurement of distributional change. Population- and income-weighted relative deprivation indices are then defined and, using panel data from the Consortium of Household Panels for European Socio-Economic Research (CHER), we check which of the various ways of defining individual deprivation best fits the answers given by individuals on the degree of their satisfaction with income. We find that the deprivation indices proposed are consistently and negatively correlated with income satisfaction as reported by respondents, that income weighted measures fit better than population weighted measures and that this fit improves with countries that experienced deep institutional changes such as the transitional economies of Eastern Europe.

Suggested Citation

  • Silber, Jacques & Verme, Paolo, 2012. "Relative deprivation, reference groups and the assessment of standard of living," Economic Systems, Elsevier, vol. 36(1), pages 31-45.
    • Handle: RePEc:eee:ecosys:v:36:y:2012:i:1:p:31-45
    DOI: 10.1016/j.ecosys.2011.04.006
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    5. Marek Kośny, 2013. "Economic activity, saving, credit and income polarisation in Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 25(4), pages 512-528, December.
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    7. Lee, Won Fy, 2012. "The Effect of Relative Income in the Dynamics of Migration: Evidence from the VHLSS Panel Data," Master's Theses and Plan B Papers 142096, University of Minnesota, Department of Applied Economics.
    8. Valentinov, Vladislav, 2015. "From equilibrium to autopoiesis: A Luhmannian reading of Veblenian evolutionary economics," Economic Systems, Elsevier, vol. 39(1), pages 143-155.

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    More about this item

    Keywords

    Generalized Gini index; Income satisfaction; Relative deprivation;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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