Subjective Well-Being and Relative Deprivation: An Empirical Link
Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS)
Joachim R. Frick
German Institute for Economic Research (DIW Berlin) (deceased) ; Institute for the Study of Labor (IZA) (deceased)
IZA Discussion Paper No. 1351
This paper explores the relationship between two well-established concepts of measuring individual well-being: the concept of happiness, i.e. self-reported level of satisfaction with income and life, and relative deprivation/satisfaction, i.e. the gaps between the individual's income and the incomes of all individuals richer/poorer than him. Operationalizing both concepts using micro panel data from the German Socio-Economic Panel (SOEP), we provide empirical evidence for subjective well-being depending more on relative satisfaction than on absolute levels of income. This finding holds even after controlling for other influential factors in a multivariate setting.
Number of Pages in PDF File: 24
Keywords: relative deprivation, satisfaction, subjective well-being, SOEP
JEL Classification: D63, I31, D31working papers series
Date posted: October 18, 2004
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