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Reference group consumption and the subjective wellbeing of the poor in Peru

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  • Guillen-Royo, Monica

Abstract

This paper studies the relationship between the consumption of the reference group and people's subjective wellbeing in seven poor Peruvian communities. It presents an empirical analysis of the importance of relative consumption for people's feelings of adequacy in five consumption domains (food, housing, education, clothes and health care). Against the assumption that relative consumption only matters for the rich and drawing on recent empirical work in Latin America, the study hypothesises that participants are likely to be influenced by the level of consumption of the area where they live when evaluating their situation. The data come from two surveys implemented in 2004 and 2005 in Peru by the Wellbeing in Developing Countries (WeD), ESRC research group at the University of Bath. The results indicate a negative effect of relative consumption on participants' appraisal of their households' clothes, housing and children's education. However, the study also shows that in domains linked to the need for physical health such as health care and food, appraisals are made based on households' objective situations and that the average consumption in the community does not play a significant role.

Suggested Citation

  • Guillen-Royo, Monica, 2011. "Reference group consumption and the subjective wellbeing of the poor in Peru," Journal of Economic Psychology, Elsevier, vol. 32(2), pages 259-272, March.
  • Handle: RePEc:eee:joepsy:v:32:y:2011:i:2:p:259-272
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    Cited by:

    1. Laura Camfield & Awae Masae & J. McGregor & Buapun Promphaking, 2013. "Cultures of Aspiration and Poverty? Aspirational Inequalities in Northeast and Southern Thailand," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(3), pages 1049-1072, December.
    2. Asadullah, Mohammad Niaz & Chaudhury, Nazmul, 2012. "Subjective well-being and relative poverty in rural Bangladesh," Journal of Economic Psychology, Elsevier, vol. 33(5), pages 940-950.
    3. Asadullah, Niaz & Xiao, Saizi & Yeoh, Emile Kok-Kheng, 2016. "Subjective Well-being in China, 2005-2010: The Role of Relative Income, Gender and Location," IZA Discussion Papers 9637, Institute for the Study of Labor (IZA).
    4. Hillesheim, Inga & Mechtel, Mario, 2013. "How much do others matter? Explaining positional concerns for different goods and personal characteristics," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 61-77.
    5. Saravana Jaikumar & Ankur Sarin, 2015. "Conspicuous consumption and income inequality in an emerging economy: evidence from India," Marketing Letters, Springer, vol. 26(3), pages 279-292, September.
    6. Victoria Reyes-García & Ronnie Babigumira & Aili Pyhälä & Sven Wunder & Francisco Zorondo-Rodríguez & Arild Angelsen, 2016. "Subjective Wellbeing and Income: Empirical Patterns in the Rural Developing World," Journal of Happiness Studies, Springer, vol. 17(2), pages 773-791, April.
    7. Yew-Kwang NG, 2017. "Ten Rules for Public Economic Policy," Economic Growth Centre Working Paper Series 1703, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    8. Monica Guillen-Royo & Tim Kasser, 2015. "Personal Goals, Socio-Economic Context and Happiness: Studying a Diverse Sample in Peru," Journal of Happiness Studies, Springer, vol. 16(2), pages 405-425, April.
    9. Alem, Yonas, 2013. "Relative Standing and Life-Satisfaction: Does Unobserved Heterogeneity Matter?," Working Papers in Economics 579, University of Gothenburg, Department of Economics.
    10. Jinan Zeidan, 2015. "Are Comparisons Luxuries? Subjective Poverty and Positional Concerns in Indonesia," AMSE Working Papers 1505, Aix-Marseille School of Economics, Marseille, France.
    11. Yew-Kwang Ng, 2016. "Welfare-Reducing Growth And Cost-Benefit Analysis: Essay In Memory Of E.J. Mishan," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(03), pages 1-9, June.
    12. Monica Guillen-Royo & Laura Camfield & Jackeline Velazco, 2013. "Universal and Local Reconciled: Exploring Satisfaction with Universal and Local Goals in Thailand and Bangladesh," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(2), pages 627-645, September.
    13. Jorge Guardiola & Monica Guillen-Royo, 2015. "Income, Unemployment, Higher Education and Wellbeing in Times of Economic Crisis: Evidence from Granada (Spain)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 120(2), pages 395-409, January.
    14. Alem, Yonas, 2014. "Life-Satisfaction in Urban Ethiopia: The Role of Relative Poverty and Unobserved Heterogeneity," Discussion Papers dp-14-04-efd, Resources For the Future.
    15. Jinan Zeidan, 2015. "Are Comparisons Luxuries? Subjective Poverty and Positional Concerns in Indonesia," Working Papers halshs-01114396, HAL.

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