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Title:Age, life-satisfaction, and relative income PDF Logo
Authors:FitzRoy, Felix
Steinhardt, Max Friedrich
Nolan, Michael
Issue Date:2011
Series/Report no.:HWWI research paper 110
Abstract:We first confirm previous results with the German Socio-economic Panel, and obtain strong negative effects of comparison income. However, when we split the sample by age, we find quite different results for reference income. The effects on life-satisfaction are positive and significant for those under 46, consistent with Hirschman's (1973) tunnel effect and only negative (and larger than in the full sample) for those over 46, when relative deprivation dominates. Thus for young respondents, reference income's signalling role, indicating potential future prospects, can outweigh relative deprivation effects. Own-income effects are also larger for the older sample, and of greater magnitude than the comparison income effect. In East Germany the reference income effects are insignificant for all age groups.
Document Type:Working Paper
Appears in Collections:HWWI Research Papers, Hamburgisches WeltWirtschaftsInstitut

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