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Relative Deprivation, Personal Income Satisfaction, and Average Well-Being under Different Income Distributions

Author

Listed:
  • Christian Seidl

    (University of Kiel)

  • Stefan Traub

    (University of Kiel)

  • Andrea Morone

    (University of Bari)

Abstract

This paper uses the data gained from an income categorization experiment for five shapes of income distributions to investigate background context effects, relative deprivation, range-frequency theory to explain back-ground context effects,individual income satisfaction versus aggregate well-being, and the dual patterns of income categorization and limen setting. It is shown that background context effects exist and are reected in relative deprivation. Not all precepts of range-frequency theory can be evidenced. Moreover, we demonstrate a welfare paradox which concerns a contradiction between individual income satisfaction and aggregate well-being. Finally, income categorization and limen setting harbor no response-mode effects, but exhibit conformity.

Suggested Citation

  • Christian Seidl & Stefan Traub & Andrea Morone, 2004. "Relative Deprivation, Personal Income Satisfaction, and Average Well-Being under Different Income Distributions," Experimental 0401004, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpex:0401004
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    References listed on IDEAS

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    1. Seidl, Christian, 2002. " Preference Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 621-655, December.
    2. Seidl, Christian & Camacho Cuena, Eva & Morone, Andrea, 2003. "Income Distributions versus Lotteries Happiness, Response-Mode Effects, and Preference," Economics Working Papers 2003-01, Christian-Albrechts-University of Kiel, Department of Economics.
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    6. Kurt Devooght, 2002. "Measuring Inequality by Counting Complaints: Theory and Empirics," STICERD - Distributional Analysis Research Programme Papers 59, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    7. Van Herwaarden, Floor G. & Kapteyn, Arie, 1979. "Empirical comparison of the shape of welfare functions," Economics Letters, Elsevier, vol. 3(1), pages 71-76.
    8. Van Praag, Bernard M. S. & Kapteyn, Arie, 1973. "Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands," European Economic Review, Elsevier, vol. 4(1), pages 33-62, April.
    9. Seidl, Christian, 1994. "How sensible is the Leyden individual welfare function of income?," European Economic Review, Elsevier, vol. 38(8), pages 1633-1659, October.
    10. Steven R. Beckman & Buhong Zheng & John P. Formby & W. James Smith, 2002. "Envy, malice and Pareto efficiency: An experimental examination," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 19(2), pages 349-367.
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    Citations

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    Cited by:

    1. Ambra Poggi, 2010. "Within-establishment wage inequality and satisfaction," LABORatorio R. Revelli Working Papers Series 100, LABORatorio R. Revelli, Centre for Employment Studies.
    2. Poggi, Ambra, 2014. "Within-establishment wage inequality and satisfaction," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-21.
    3. Camacho-Cuena, Eva & Seidl, Christian & Morone, Andrea, 2005. "Comparing preference reversal for general lotteries and income distributions," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 682-710, October.
    4. Morone, Andrea & Ozdemir, Ozlem, 2012. "Black swan protection: an experimental investigation," MPRA Paper 38842, University Library of Munich, Germany.
    5. Stefan Traub & Tim Krieger, 2008. "Back to Bismarck? Shifting Preferences for Intragenerational Redistribution in OECD Pension Systems," LIS Working papers 485, LIS Cross-National Data Center in Luxembourg.
    6. Brown, Gordon D. A. & Gardner, Jonathan & Oswald, Andrew J. & Qian, Jing, 2005. "Does Wage Rank Affect Employees' Wellbeing?," IZA Discussion Papers 1505, Institute for the Study of Labor (IZA).
    7. Tim Krieger & Stefan Traub, 2008. "Back to Bismarck? Shifting Preferences for Intragenerational Redistribution in OECD Pension Systems," Working Papers CIE 13, Paderborn University, CIE Center for International Economics.
    8. Krzysztof Zagorski & Mariah Evans & Jonathan Kelley & Katarzyna Piotrowska, 2014. "Does National Income Inequality Affect Individuals’ Quality of Life in Europe? Inequality, Happiness, Finances, and Health," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(3), pages 1089-1110, July.
    9. Zagórski, K. & Piotrowska, K., 2013. "GINI DP 66: Income Inequality in Nations and Sub- national Regions, Happiness and Economic Attitudes," GINI Discussion Papers 66, AIAS, Amsterdam Institute for Advanced Labour Studies.
    10. Seidl, Christian & Camacho Cuena, Eva & Morone, Andrea, 2003. "Income Distributions versus Lotteries Happiness, Response-Mode Effects, and Preference," Economics Working Papers 2003-01, Christian-Albrechts-University of Kiel, Department of Economics.

    More about this item

    Keywords

    Relative Deprivation; Income Distributions; Income Satisfaction; Context Effects;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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