Social Capital and Relative Income Concerns: Evidence from 26 Countries

University of St. Gallen, Department of Economics, Discussion Paper No. 2007-05

66 Pages Posted: 27 Mar 2007

See all articles by Justina A. V. Fischer

Justina A. V. Fischer

Organization for Economic Co-Operation and Development (OECD); Stockholm School of Economics; University of Hohenheim

Benno Torgler

Yale University - Yale Center for International and Area Studies

Date Written: February 2007

Abstract

Research evidence on the impact of relative income position on individuals' attitudes and behaviour is sorely lacking. Therefore, using the International Social Survey Programme 1998 data from 26 countries this paper investigates the impact of relative income on 14 measurements of social capital. We find support for a considerable deleterious positional concern effect of persons below the reference income. This effect is more sizeable by far than the beneficial impact of a relative income advantage. Most of the results indicate that such an effect is non-linear. Lastly, changing the reference group (regional versus national) produces no significant differences in the results.

Keywords: Relative income, positional concerns, social capital, social norms, happiness

JEL Classification: Z13, I30, D31

Suggested Citation

Fischer, Justina A.V. and Torgler, Benno, Social Capital and Relative Income Concerns: Evidence from 26 Countries (February 2007). University of St. Gallen, Department of Economics, Discussion Paper No. 2007-05. Available at SSRN: https://ssrn.com/abstract=971575 or http://dx.doi.org/10.2139/ssrn.971575

Justina A.V. Fischer (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Stockholm School of Economics

PO Box 6501
Stockholm, 11383
Sweden

University of Hohenheim

Fruwirthstr. 48
Stuttgart, 70599
Germany

Benno Torgler

Yale University - Yale Center for International and Area Studies ( email )

P.O. Box 208206
New Haven, CT 06520-8206
United States

HOME PAGE: http://www.crema-research.ch/fellowseiten/torgler.htm

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