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Positional Income Concerns: Prevalence and Relationship with Personality and Economic Preferences

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  • Tim Friehe
  • Mario Mechtel
  • Markus Pannenberg

Abstract

This paper presents detailed evidence about who compares to whom in terms of relative income. We rely on representative survey data on the importance of income comparisons vis-a-vis seven reference groups, allowing us to exploit within-subject heterogeneity. We explore the prevalence and determinants of positional income concerns, investigating the role of personality and economic preferences. Our results establish robust relationships between positional income concerns and the personality traits agreeableness, conscientiousness, and neuroticism, some of which depend on the reference group. Furthermore, risk and fairness preferences are significantly correlated with positional income concerns.

Suggested Citation

  • Tim Friehe & Mario Mechtel & Markus Pannenberg, 2014. "Positional Income Concerns: Prevalence and Relationship with Personality and Economic Preferences," SOEPpapers on Multidisciplinary Panel Data Research 712, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp712
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    Cited by:

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    3. Marcin Piekałkiewicz, 2017. "Why do economists study happiness?," The Economic and Labour Relations Review, , vol. 28(3), pages 361-377, September.
    4. Bereket Kebede & Nicole Gross-Camp & Adrian Martin & Shawn McGuire & Joseph Munyarukaza, 2018. "Inequality, envy and personality in public goods: An experimental study," CSAE Working Paper Series 2018-10, Centre for the Study of African Economies, University of Oxford.
    5. de Pinto Marco & Goerke Laszlo, 2019. "Efficiency Wages in Cournot-Oligopoly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-13, October.
    6. Baumann, Florian & Friehe, Tim, 2015. "Status concerns as a motive for crime?," International Review of Law and Economics, Elsevier, vol. 43(C), pages 46-55.
    7. Marco de Pinto, 2015. "Firm-level versus Sector-level Trade Unions – The Role of Rent-Sharing Motives," IAAEU Discussion Papers 201508, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    8. Stefano Bartolini & Marcin Piekalkiewicz & Francesco Sarracino, 2019. "A Social Cure for Social Comparisons," Department of Economics University of Siena 797, Department of Economics, University of Siena.

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    More about this item

    Keywords

    Relative income; status; personality; Big Five; survey; SOEP; economic preferences; risk; fairness;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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