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Effects of Objective and Subjective Income Comparisons on Subjective Wellbeing

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  • Hodkinson, Brennan

    () (Environmental–Economics Policy Research Unit (EPRU))

  • Visser, Martine

    () (SALDRU, School of Economics, University of Cape Town)

Abstract

We present results from the Cape Area Panel Study dataset investigating how social comparisons with regard to income affect subjective wellbeing of both young adults and parents. Objective and subjective measures of relative income are used, assessing how individuals compare themselves to others and to themselves over time. Strong evidence is found to suggest that social comparisons affect subjective wellbeing, both relative to neighbours and relative to oneself in the past. Objective measures of wellbeing also influence happiness, but this is more prevalent in interpersonal than inter-temporal comparisons. It is possible that some adaptation does occur within individuals over time.

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  • Hodkinson, Brennan & Visser, Martine, 2013. "Effects of Objective and Subjective Income Comparisons on Subjective Wellbeing," SALDRU Working Papers 118, Southern Africa Labour and Development Research Unit, University of Cape Town.
  • Handle: RePEc:ldr:wpaper:118
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    Keywords

    Subjective Wellbeing; Happiness; Relative Income; Social Comparisons; Habituation; Cape Area Panel Study; CAPS; South Africa;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H00 - Public Economics - - General - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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