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Direct Evidence for Income Comparisons and Subjective Well-Being across Reference Groups

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  • Laszlo Goerke
  • Markus Pannenberg

Abstract

This note provides evidence for the relationship between income comparisons and subjective well-being (SWB), using novel German data on self-reported comparison intensity and perceived relative income for seven reference groups. We find negative correlations between comparison intensity and SWB for colleagues, people in the same occupation and friends, but not for other reference groups, such as neighbours. Work-related income comparisons are mostly upwards and there is a strong negative correlation between perceiving to earn less than the reference group and SWB.

Suggested Citation

  • Laszlo Goerke & Markus Pannenberg, 2015. "Direct Evidence for Income Comparisons and Subjective Well-Being across Reference Groups," CESifo Working Paper Series 5546, CESifo.
    • Handle: RePEc:ces:ceswps:_5546
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    1. AndrewE. Clark & Claudia Senik, 2010. "Who Compares to Whom? The Anatomy of Income Comparisons in Europe," Economic Journal, Royal Economic Society, vol. 120(544), pages 573-594, May.
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    7. Clark, Andrew E. & Senik, Claudia & Yamada, Katsunori, 2017. "When experienced and decision utility concur: The case of income comparisons," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 70(C), pages 1-9.
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    12. repec:hal:pseose:halshs-00754447 is not listed on IDEAS
    13. Felix FitzRoy & Michael Nolan & Max Steinhardt & David Ulph, 2014. "Testing the tunnel effect: comparison, age and happiness in UK and German panels," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-30, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    income comparisons; German Socio-Economic Panel (SOEP); relative income; subjective well-being;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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