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Absolute vs Relative Income and Life Satisfaction

Listed author(s):
  • Rickardsson, Jonna

    ()

    (Jönköping International Business School (JIBS))

  • Mellander, Charlotta

    ()

    (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS))

Registered author(s):

    This paper examines whether subjective life-satisfaction is most strongly related to absolute or relative income in terms of either proximal neighbors or a wider aggregated region. The analysis utilizes two unique datasets - survey data on happiness in combination with fine-level income data for postal codes and municipalities. We find a significant relationship between happiness and both personal income and relative income position among nearby neighbors and more remote neighbors. Hence, being rich as well as being richer than others in the area increases the likelihood of being more satisfied with life. Above all, we find individuals’ level of life-satisfaction to be more strongly related to the income of people in the larger municipality than to the income of nearby neighbors.

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    File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp451.pdf
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    Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 451.

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    Length: 28 pages
    Date of creation: 17 Mar 2017
    Handle: RePEc:hhs:cesisp:0451
    Contact details of provider: Postal:
    CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

    Phone: +46 8 790 95 63
    Web page: http://www.infra.kth.se/cesis/

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