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Income comparisons among neighbours and life satisfaction in East and West Germany

  • Knies, Gundi

This paper draws on the German Socio-economic Panel Study (SOEP) to investigate whether changes in others' income are perceived differently in post-transition and capitalist societies. We find that the neighbourhood income effect for West Germany is negative and slightly more marked in neighbourhoods where the neighbours interact socially. In contrast, the coefficients on neighbourhood income in East Germany are positive, but not statistically significant. This suggests not only that there is a divide between East and West Germany, but also that neighbours may not be a relevant comparison group in societies that have comparatively low levels of neighbouring.

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File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2010-11.pdf
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Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2010-11.

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Date of creation: 20 Apr 2010
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Publication status: published
Handle: RePEc:ese:iserwp:2010-11
Contact details of provider: Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
Phone: 44-1206-872957
Fax: 44-1206-873151
Web page: https://www.iser.essex.ac.uk/Email:


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Order Information: Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
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  1. Robert Drago & Mark Wooden & Yi-Ping Tseng, 2004. "Investigating the Role of Neighbourhood Characteristics in Determining Life Satisfaction," Melbourne Institute Working Paper Series wp2004n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Gundi Knies, 2009. "The Effects of Mobility on Neighbourhood Social Ties," SOEPpapers on Multidisciplinary Panel Data Research 175, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2007. "Lags and leads in life satisfaction: a test of the baseline hypothesis," LSE Research Online Documents on Economics 19656, London School of Economics and Political Science, LSE Library.
  4. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
  5. Guglielmo Maria Caporale & Yannis Georgellis & Nicholas Tsitsianis & Ya Ping Yin, 2007. "Income and Happiness across Europe: Do Reference Values Matter?," CESifo Working Paper Series 2146, CESifo Group Munich.
  6. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
  7. Gundi Knies & Simon Burgess & Carol Propper, 2007. "Keeping up with the Schmidts: An Empirical Test of Relative Deprivation Theory in the Neighbourhood Context," SOEPpapers on Multidisciplinary Panel Data Research 24, DIW Berlin, The German Socio-Economic Panel (SOEP).
  8. Blanchflower, David G. & Oswald, Andrew J., 2001. "Well-Being Over Time in Britain and the USA," The Warwick Economics Research Paper Series (TWERPS) 616, University of Warwick, Department of Economics.
  9. Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Money Does Matter! Evidence from Increasing Real Income and Life Satisfaction in East Germany Following Reunification," American Economic Review, American Economic Association, vol. 94(3), pages 730-740, June.
  10. Jan Goebel & C. Katharina Spieß & Nils R. J. Witte & Susanne Gerstenberg, 2007. "Die Verknüpfung des SOEP mit MICROM-Indikatoren: Der MICROM-SOEP Datensatz," Data Documentation 26, DIW Berlin, German Institute for Economic Research.
  11. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 963-1002, August.
  12. Ed Diener & Ed Sandvik & Larry Seidlitz & Marissa Diener, 1993. "The relationship between income and subjective well-being: Relative or absolute?," Social Indicators Research, Springer, vol. 28(3), pages 195-223, March.
  13. Senik, Claudia, 2004. "When information dominates comparison: Learning from Russian subjective panel data," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2099-2123, August.
  14. Stephen Gibbons & Stephen Machin, 2008. "Valuing school quality, better transport, and lower crime: evidence from house prices," Oxford Review of Economic Policy, Oxford University Press, vol. 24(1), pages 99-119, spring.
  15. Hirschman, Albert O., 1973. "The changing tolerance for income inequality in the course of economic development," World Development, Elsevier, vol. 1(12), pages 29-36, December.
  16. Michael Shields & Stephen Wheatley Price & Mark Wooden, 2009. "Life satisfaction and the economic and social characteristics of neighbourhoods," Journal of Population Economics, Springer, vol. 22(2), pages 421-443, April.
  17. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
  18. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
  19. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
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