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A Curse of Comparison? Evidence on Reference Groups for Relative Income Concerns

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  • Kuegler, Alice

    () (The World Bank)

Abstract

This paper proposes that individuals care about the relative income of proximate reference groups. Making use of self-reported life satisfaction as a proxy for unobservable utility, the relative income of siblings is tested for relevance as a reference point for new sample data from Venezuela. Having greater perceived income than one's siblings is found to be positively linked to individual life satisfaction. This evidence supplements the scarce economic research on reference groups, supporting the hypothesis that individuals with proximate characteristics and resembling opportunities in life serve as points of comparison.

Suggested Citation

  • Kuegler, Alice, 2009. "A Curse of Comparison? Evidence on Reference Groups for Relative Income Concerns," Policy Research Working Paper Series 4820, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4820
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    References listed on IDEAS

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    Cited by:

    1. Lee, Won Fy, 2012. "The Effect of Relative Income in the Dynamics of Migration: Evidence from the VHLSS Panel Data," Master's Theses 142096, University of Minnesota, Department of Applied Economics.

    More about this item

    Keywords

    reference groups; relative income; life satisfaction;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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