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Subjective Well-Being and Relative Deprivation: An Empirical Link

Discussion Papers 449, 22 S.

Conchita D'Ambrosio, Joachim R. Frick

2004. Okt.

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This paper explores the relationship between two well-established con-cepts of measuring individual well-being: the concept of happiness, i.e. self-reported level of satisfaction with income and life, and relative deprivation/satisfaction, i.e. the gaps between the individual's income and the incomes of all individuals richer/poorer than him. Operationalizing both concepts using micro panel data from the German Socio-Economic Panel, we provide empirical evidence for subjective well-being dependingmore on relative satisfaction than on absolute levels of income. This finding holds even after controlling for other influential factors in a multivariate setting.

Topics: Well-being

JEL-Classification: D63;I31;D31
Keywords: Relative deprivation; Satisfaction; Subjective well-being; SOEP
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