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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26190
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| Title: | | Income and happiness across Europe: do reference values matter?  |
| Authors: | | Caporale, Guglielmo Maria Georgellis, Yannis Tsitsianis, Nicholas Ping, Ya |
| Issue Date: | | 2007 |
| Series/Report no.: | | CESifo working paper 2146 |
| Abstract: | | Using data from the European Social Survey (ESS), we examine the link between income and subjective well-being. We find that, for the whole sample of nineteen European countries, although income is positively correlated with both happiness and life satisfaction, reference income exerts a negative effect on individual well-being, a result consistent with the relative utility hypothesis. Performing separate analyses for some Eastern European countries, we also find some evidence of a tunnel effect, in that reference income has a positive impact on subjective well-being. Our findings support the view that in environments with stable income and employment, reference income serves as a basis for social comparisons, whereas in relatively volatile environments, it is used as a source of information for forming expectations about future status. |
| Subjects: | | comparison income reference groups happiness life satisfaction |
| JEL: | | I31 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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