The Impact of Self-Perceived Relative Income on Life Satisfaction: Evidence from British Panel Data

DOI: 10.1002/soej.12349

47 Pages Posted: 22 Aug 2017 Last revised: 2 Apr 2019

See all articles by Han Yu

Han Yu

University of Memphis

Date Written: February 7, 2019

Abstract

This is the first article that uses panel data to investigate the impact of individuals' self‐perceived relative income on life satisfaction. Analyses show that the self‐perceived relative income has a significant impact on life satisfaction, but the impact is asymmetric. The decline in life satisfaction is much more significant due to perceiving a lower relative income in comparison to the rise in life satisfaction because of perceiving a higher relative income. Absolute income is only significantly and positively associated with life satisfaction in the pooled ordinary least squares estimations, but the association is never significantly different from zero when individual fixed effects are controlled. Household savings have a positive but small impact on life satisfaction. Among different financial‐related shocks, people's self‐perceived relative income varies the most due to changes in household net income, total savings, and employment status.

Keywords: Self-Perceived Relative Income, Subjective Well-Being

JEL Classification: C23, C25, D31, D63, I31, J31, Z13

Suggested Citation

Yu, Han, The Impact of Self-Perceived Relative Income on Life Satisfaction: Evidence from British Panel Data (February 7, 2019). DOI: 10.1002/soej.12349, Available at SSRN: https://ssrn.com/abstract=3022126 or http://dx.doi.org/10.2139/ssrn.3022126

Han Yu (Contact Author)

University of Memphis

The University of Memphis
Department of Economics
Memphis, TN TN 38152
United States

HOME PAGE: http://www.hanyuecon.com

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