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Relative deprivation, reference groups and the assessment of standard of living


  • Silber, Jacques
  • Verme, Paolo


This paper proposes two new indices of relative deprivation, derived from an extension of the concept of the generalized Gini for the measurement of distributional change. Population- and income-weighted relative deprivation indices are then defined and, using panel data from the Consortium of Household Panels for European Socio-Economic Research, this paper checks which of the various ways of defining individual deprivation best fits the answers given by individuals on the degree of their satisfaction with income. The analysis finds that the deprivation indices proposed are consistently and negatively correlated with income satisfaction as reported by respondents, that income weighted measures fit better than population weighted measures, and that this fit improves with countries that experienced deep institutional changes such as the transitional economies of Eastern Europe.

Suggested Citation

  • Silber, Jacques & Verme, Paolo, 2012. "Relative deprivation, reference groups and the assessment of standard of living," Policy Research Working Paper Series 5930, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5930

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    References listed on IDEAS

    1. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July.
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    6. Ed Hopkins, 2008. "Inequality, happiness and relative concerns: What actually is their relationship?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(4), pages 351-372, December.
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    15. Paolo Verme, 2010. "Relative labour deprivation and urban migration in Turkey," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(4), pages 391-408, December.
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    Cited by:

    1. Fu, Mengzhu & Exeter, Daniel J. & Anderson, Anneka, 2015. "The politics of relative deprivation: A transdisciplinary social justice perspective," Social Science & Medicine, Elsevier, vol. 133(C), pages 223-232.
    2. repec:iza:izawol:journl:y:2017:n:372 is not listed on IDEAS
    3. Marek Kośny, 2012. "Relative Income Changes and an Identification of Growth Pattern," Working Papers 268, ECINEQ, Society for the Study of Economic Inequality.
    4. 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.
    5. Valentinov, Vladislav, 2015. "From equilibrium to autopoiesis: A Luhmannian reading of Veblenian evolutionary economics," Economic Systems, Elsevier, vol. 39(1), pages 143-155.

    More about this item


    Inequality; Economic Theory&Research; Poverty Impact Evaluation; Labor Policies; Emerging Markets;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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