Reference Group Income and Subjective Well-Being: Empirical Evidence from Low-Income Transition Economies
Social Indicators Research, Forthcoming
24 Pages Posted: 30 May 2015
Date Written: May 29, 2015
This paper aims at studying the connection between reference group income and life satisfaction in the three republics of the South Caucasus: Armenia, Azerbaijan, and Georgia. I illustrate that in low-income transition economies individuals make not only upward comparisons, decreasing their subjective well-being if the reference group members are richer than they are, but also downward comparisons, enhancing their subjective well-being if the reference group members are poorer. This result contradicts Duesenberry’s idea that comparisons are mostly upward.
Keywords: Subjective Well-Being, Reference Group, Transition Economy, Upward Comparison, Downward Comparison
JEL Classification: D60, D63, I31, P30
Suggested Citation: Suggested Citation