A Curse of Comparison? Evidence on Reference Groups for Relative Income Concerns

This paper proposes that individuals care about the relative income of proximate reference groups. Making use of self-reported life satisfaction as a proxy for unobservable utility, the relative income of siblings is tested for relevance as a refer...

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Bibliographic Details
Main Author:	Kuegler, Alice
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ADEQUATE INCOME AGGREGATE DEMAND ASYMMETRIC INFORMATION AVERAGE INCOME AVERAGE INCOMES BASIC NEEDS CHECKS COMMODITIES CONSUMER CONSUMER BEHAVIOR CONTRIBUTION DECISION MAKING DECREASING FUNCTION DEMOCRACY DEPENDENT VARIABLE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMETRIC ANALYSIS ECONOMETRIC PROBLEMS ECONOMIC GROWTH ECONOMIC MODELS ECONOMIC PERFORMANCE ECONOMIC POLICY ECONOMIC RESEARCH ECONOMIC REVIEW ECONOMIC SITUATION ECONOMIC THEORY EDUCATION PROGRAMS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL FINDINGS EMPIRICAL MODEL EMPIRICAL STUDIES EQUILIBRIUM LEVEL EXPLANATORY VARIABLES FINANCIAL SUPPORT FUTURE INCOME HOUSEHOLD SIZE HOUSEWIFE INCOME DATA INCOME EFFECT INCOME INCREASES INCOME INEQUALITY INCOME VARIABLES INCOMES INFLATION JOB LOSS LABOR SUPPLY LACK OF KNOWLEDGE LINEAR RELATIONSHIP LITERACY LIVING STANDARD LIVING STANDARDS LOSS AVERSION LOW INCOME MARGINAL PRODUCTS MARKET ECONOMIES MARRIED WOMEN MEASUREMENT ERROR MEASUREMENT ERRORS MEDIAN INCOME MEMBER COUNTRIES MINIMUM WAGE MONTHLY INCOME NEGATIVE COEFFICIENT NEGATIVE EFFECT NEGATIVE EXTERNALITIES NEGATIVE SIGN OFFICE WORKERS OIL PRODUCTION PENSIONER PER CAPITA INCOME PERSONALITY TRAIT POLICY IMPLICATIONS POLICY RESEARCH POLICY REVIEW POLITICAL PARTICIPATION POLITICAL STABILITY POSITIVE COEFFICIENT POSITIVE EFFECT POSITIVE EFFECTS POSITIVE EXTERNALITIES POSITIVE RELATIONSHIP POVERTY LEVELS PROSPERITY PUBLIC ECONOMICS PUBLIC POLICY QUESTIONNAIRE REAL INCOME REDISTRIBUTIVE TAXATION REGRESSION ANALYSES RELATIVE EARNINGS RELATIVE INCOME RELATIVE POSITION RISK SHARING RISK SHARING ARRANGEMENTS SAMPLE SIZE SAVINGS SECONDARY EDUCATION SECONDARY SCHOOL SIGNIFICANT IMPACT SOCIAL CAPITAL SOCIAL INDICATORS UNEMPLOYED UNEMPLOYMENT UNEMPLOYMENT BENEFITS UTILITY FUNCTION UTILITY FUNCTIONS VOTERS WEALTH
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090121165405 http://hdl.handle.net/10986/4019

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Summary:	This paper proposes that individuals care about the relative income of proximate reference groups. Making use of self-reported life satisfaction as a proxy for unobservable utility, the relative income of siblings is tested for relevance as a reference point for new sample data from Venezuela. Having greater perceived income than one's siblings is found to be positively linked to individual life satisfaction. This evidence supplements the scarce economic research on reference groups, supporting the hypothesis that individuals with proximate characteristics and resembling opportunities in life serve as points of comparison.

A Curse of Comparison? Evidence on Reference Groups for Relative Income Concerns

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