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The Power of Positional Concerns: A Panel Analysis

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  • Torgler, Benno
  • Schmidt, Sascha L
  • Frey, Bruno S.

Abstract

Many studies have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. However, behavioral evidence is rare. This paper provides an empirical analysis on how individuals’ relative income position affects their performance. Using a unique data set for 1040 soccer players over a period of eight seasons, our analysis suggests that if a player’s salary is below the average and this difference increases, his performance worsens and the productivity decreasing effects of positional concerns are stronger. Moreover, the larger the income differences within a team, the stronger positional concern effects are observable. We also find that the more the players are integrated in a particular social environment (their team), the more evident a relative income effect is. Finally, we find that positional effects are stronger among high performing teams.

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  • Torgler, Benno & Schmidt, Sascha L & Frey, Bruno S., 2006. "The Power of Positional Concerns: A Panel Analysis," Berkeley Olin Program in Law & Economics, Working Paper Series qt1z14v7zt, Berkeley Olin Program in Law & Economics.
  • Handle: RePEc:cdl:oplwec:qt1z14v7zt
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    Cited by:

    1. Markus Schaffner & Benno Torgler, 2008. "Meet the Joneses: An Empirical Investigation of Reference Groups in Relative Income Position Comparisons," CREMA Working Paper Series 2008-13, Center for Research in Economics, Management and the Arts (CREMA).
    2. Lampi, Elina & Nordblom, Katarina, 2010. "Money and success - Sibling and birth-order effects on positional concerns," Journal of Economic Psychology, Elsevier, vol. 31(1), pages 131-142, February.
    3. Justina A.V. Fischer & Benno Torgler, 2007. "Social capital and relative income concerns: evidence from 26 countries," University of St. Gallen Department of Economics working paper series 2007 2007-05, Department of Economics, University of St. Gallen.
    4. David Stadelmann & Reiner Eichenberger, 2008. "Wer ist der beste Formel 1 Fahrer? Eine ökonometrische Talentbewertung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(4), pages 486-512, November.
    5. Zeballos, Eliana, 2015. "Getting a Leg Up or Pulling it Down? Interpersonal Comparisons and Destructive Actions: Experimental Evidence from Bolivia," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205660, Agricultural and Applied Economics Association.
    6. Markus Schaffner & Benno Torgler, 2008. "Meet the Joneses: An Empirical Investigation of Reference Groups in Relative Income Position Comparisons," CREMA Working Paper Series 2008-13, Center for Research in Economics, Management and the Arts (CREMA).
    7. Martin Gächter & David A. Savage & Benno Torgler, 2009. "Retaining the Thin Blue Line: What Shapes Workers' Intentions not to Quit the Current Work Environment," Working Papers 2010-05, Faculty of Economics and Statistics, Universität Innsbruck, revised Mar 2010.
    8. Justina A.V. Fischer & Benno Torgler, 2013. "Do Positional Concerns Destroy Social Capital: Evidence From 26 Countries," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1542-1565, April.
    9. Justina A.V. Fischer & Benno Torgler, 2013. "Do Positional Concerns Destroy Social Capital: Evidence From 26 Countries," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1542-1565, April.
    10. Zeballos, Eliana, 2015. "Getting a Leg Up or Pulling it Down? Interpersonal Comparisons and Destructive Actions: Experimental Evidence from Bolivia," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206857, Agricultural and Applied Economics Association.
    11. Martin Gächter & David A. Savage & Benno Torgler, 2009. "Retaining the Thin Blue Line: What Shapes Workers' Willingness Not to Quit the Current Work Environment," CREMA Working Paper Series 2009-28, Center for Research in Economics, Management and the Arts (CREMA).
    12. Martin Gächter & David A. Savage & Benno Torgler, 2009. "Retaining the Thin Blue Line: What Shapes Workers' Willingness Not to Quit the Current Work Environment," CREMA Working Paper Series 2009-28, Center for Research in Economics, Management and the Arts (CREMA).

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    Keywords

    D000; D600; 8222; 9210; L830;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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