Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73670
Authors: 
Goerke, Laszlo
Pannenberg, Markus
Year of Publication: 
2013
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research 549
Abstract: 
Subjective well-being (SWB) is generally argued to rise with relative income. However, direct evidence is scarce on whether and how intensively individuals undertake income comparisons, to whom they relate, and what they perceive their relative income to be. In this paper, novel data with direct information on income comparison intensity and perceived relative income with respect to predetermined reference groups is used to provide evidence on the relationship between income comparisons and SWB. We find negative correlations between comparison intensity and SWB for co-workers, people in the same occupation and friends. For job-related reference groups income comparisons are mostly upwards and perceiving to earn less than the reference group is negatively correlated with SWB.
Subjects: 
income comparisons
endogenous reference groups
German Socio-Economic Panel (SOEP)
subjective well-being
JEL: 
D31
D62
I31
Document Type: 
Working Paper

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