Social Comparisons and Life Satisfaction Across Racial and Ethnic Groups: The Effects of Status, Information and Solidarity

31 Pages Posted: 25 Apr 2012 Last revised: 22 Jan 2013

See all articles by Lewis Davis

Lewis Davis

Union College - Department of Economics

Stephen Wu

Hamilton College - Economics Department

Date Written: January 21, 2013

Abstract

This paper explores the role of within group social comparisons on the life satisfaction of different racial and ethnic groups in the U.S. For Whites, we find that higher group income levels are associated with lower levels of life satisfaction, a result that is consistent with a preference for within group status. In contrast, life satisfaction is increasing in group income for Blacks. This result is consistent with the existence of social norms that emphasize Black solidarity. It is also consistent with an information effect in which Blacks rely on peer income levels to form expectations regarding their future prospects. We introduce a theoretical framework to help to distinguish between solidarity and information effects. Our empirical results provide strong support for the hypothesis that solidarity rather than information accounts for the positive relationship between average Black income and the subjective well-being of US Blacks. Finally, we consider two theories of social solidarity, and find support for social salience but not social density in determining the strength of solidarity effects.

Keywords: Happiness, Subjective Wellbeing, Race, Status, Relative Income Preferences, Solidarity, Tunnel Effects

JEL Classification: D1, I3, J15

Suggested Citation

Davis, Lewis S. and Wu, Stephen, Social Comparisons and Life Satisfaction Across Racial and Ethnic Groups: The Effects of Status, Information and Solidarity (January 21, 2013). Available at SSRN: https://ssrn.com/abstract=2045902 or http://dx.doi.org/10.2139/ssrn.2045902

Lewis S. Davis (Contact Author)

Union College - Department of Economics ( email )

Schenectady, NY 12308-3107
United States

Stephen Wu

Hamilton College - Economics Department ( email )

198 College Hill Road
Clinton, NY 13323
United States

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