The Effect of Income on General Life Satisfaction and Dissatisfaction

Increasing evidence from the empirical economic and psychological literature suggests that positive and negative well-being are more than opposite ends of the same phenomenon. Two separate measures of the dependent variable may therefore be needed when analyzing the determinants of subjective well-being. We investigate asymmetries in the effect of income on subjective well-being with a single-item measure of general life satisfaction. Using data from the German Socio-Economic Panel 1984–2004, and a flexible multiple-index ordered probit panel data model with varying thresholds, we find that income has only a minor effect on high satisfaction but significantly reduces dissatisfaction.     

Relative Standing and Subjective Well-Being in South Africa: The Role of Perceptions,Expectations and Income Mobility

Most studies that explore the impact of relative standing on subjective well-being use objective measures of the individual’s relative position, such as the mean income of the reference group or the individual’s ranking in the relevant income distribution. In this paper, using a new household survey from South Africa, we are able to derive subjective measures of relative standing, as information is collected on individuals’ perceptions of where they rank in the income distribution. We find considerable differences between objective and subjective measures of an individual’s relative ranking. Furthermore, our results suggest that an individual’s perceived relative status has a significantly larger effect on subjective well-being than objective measures of relative status based on reported income. We also examine the effects on subjective well-being of how individuals perceive their relative position in the income distribution to have changed since childhood, and what they expect their relative position to be in the future. We find that future upward mobility has a smaller effect than upward mobility compared to one’s past, suggesting that life satisfaction is influenced more by what has been achieved than by anticipated achievements.     

How Does Relative Income and Variations in Short-Run Wellbeing Affect Wellbeing in the Long Run? Empirical Evidence From China’s Korean Minority

Cognitively appraised life satisfaction is relatively stable over time and can be considered as reflecting subjective wellbeing in the long run. Affect is transitory and can be considered as reflecting subjective wellbeing in the short run. Using the Personal Wellbeing Index to measure cognitively appraised life satisfaction and the Positive and Negative Affect Schedule to measure positive and negative affect we examine how income relative to one’s comparator group and variations in short run wellbeing impact upon wellbeing in the long run. We do so for China’s Korean ethnic minority. We find that affective state has an effect on wellbeing in the long run and that a negative shock to affectivity is more persistent than a positive shock. We also find that relative income, rather than absolute income, matters for wellbeing in the long run and that the results are consistent with a status effect.     

Subjective Poverty and Its Relation to Objective Poverty Concepts in Hungary

The paper analyzes subjective poverty in Hungary and compares it to the objective poverty concepts. Subjective poverty is defined by examining who people consider to be poor. Based on the Easterlin paradox, the initial hypothesis states that subjective and absolute poverty concepts are highly correlated. Taking into account that Hungary is a developed country, subjective well-being is supposed to be associated not only with absolute, but also with relative deprivation. The methods of systematic data collection are used to collect data about the belief of the population. The paper concludes that low income level, Roma descent, entitlement to social supports and unemployment are the items thought to be most related to poverty by the informants. It proves that subjective poverty is a multidimensional concept. It also concludes that absolute and relative poverty thresholds coincide with the subjective one. It implies that increasing the absolute income level of individuals may not be enough to improve their subjective wellbeing as they are also concerned with their relative income position.     

Family Structure and Subjective Economic Well-Being: Some New Evidence

The paper investigates the main socio-demographic and economic determinants of subjective economic well-being in different typologies of households. Previous studies have used dummy variables to explore the effect of family structure. In this paper, however four different models—one for each family typology—have been estimated to test if each selected explanatory variable is significant and how it acts in determining the level of subjective economic well-being. To achieve this, we apply an under-used logit model—the partial proportional ordered model. Our analysis, based on data from the 2005 Italian Survey on Income and Living Conditions highlights the main variables affecting the subjective economic well-being of all household typologies. These main variables are related to income adequacy, such as being able to afford housing, clothes and holidays, and also include the work-status and level of education of the respondent. These variables produce notable differences in the level of subjective economic well-being. We find that couples with no children have the highest level of perceived economic well-being, while couples with two or more children and even more so one-person households are more economically insecure.     

Relative Income and Happiness in Asia: Evidence from Nationwide Surveys in China, Japan, and Korea

This study attempts to examine relative income effects on perceived happiness in three major Asian countries—China, Japan, and Korea—in comparison with the United Sates, on the basis of largely comparable nationwide surveys in these countries. Consistent with the results from previous studies in Western countries, comparisons with an individual’s own income and average income of the reference group are significantly associated with the individual’s perceived happiness in Asia. The associations between relative income and happiness are stronger for individual income than family income in China, while the opposite is true in Japan and Korea. Even after controlling for the subjective assessment of family income or personal class identification within the society as a whole, income comparisons within the reference group matter for assessing happiness, especially when using family income for comparisons. Moreover, relative deprivation within the reference group, which is measured by the Yitzhaki index, is negatively related to happiness, providing more evidence for the validity of the relative income hypothesis.     

The Richer, the Happier? An Empirical Investigation in Selected European Countries

This study analyses the relationship between subjective and objective measures of well-being in selected European countries using the data of the European Community Household Panel (ECHP). In the first part of the paper, we develop a random-effect ordered probit model, separately for each country, relating the subjective measure of income satisfaction to actual income, and controlling for some individual and household socio-demographic fixed effects. In the second part of the paper, we fit a Bayesian cross-classified multilevel model, in order to control for intra-family correlation in subjective well-being, which actually appears to be present. The research was financially supported by the Italian Ministry of University and Scientific Research and by the 5th European Research Programme (FELICIE – Future Elderly Living Conditions In Europe, No. QLRT-2001-02310, http://www.felicie.org). We gratefully acknowledge the contribution of an anonymous referee.     

Subjective Well-being in Rural India: The Curse of Conspicuous Consumption

Using data on 697 individuals from 375 rural low income households in India, we test expectations on the effects of relative income and conspicuous consumption on subjective well-being. The results of the multi-level regression analyses show that individuals who spent more on conspicuous consumption report lower levels of subjective well-being. Surprisingly an individual’s relative income position does not affect feelings of well-being. Motivated by positional concerns, people do not passively accept their relative rank but instead consume conspicuous goods to keep up with the Joneses. Conspicuous consumption always comes at the account of the consumption of basic needs. Our analyses point at a positional treadmill effect of the consumption of status goods.     

Income Satisfaction and Relative Deprivation: An Empirical Link

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

Influences and Consequences of Well-being Among Australian Young People: 1980–1995

This paper investigates the determinants and consequences of subjective well-being. Although there is an extensive literature on well-being there are few panel studies which measure well-being frequently and over a long time period. The Australian Youth in Transition panel data is used to examine several aspects of well-being: the influence of sociodemographic and labour market characteristics, the dynamics of well-being and its determinants; the isolation of aging, cohort and contextual effects, and the effects of well-being on marital status and labour market outcomes. Women and those married or in de facto relationships show higher levels of well-being. The effect of being in a de facto relationship is sensitive to age. The presence of children decreases subjective-well-being and again this effect is age-specific. Income and occupational statusalso influence well-being with income having consistent effects and status effects declining. The unemployed consistently show substantially lower levels of well-being. Contextual effects were identified, increases in the national level of unemployment decrease average well-being levels in all but the youngest cohort. Controlling for lagged effects, subjective well- being has substantial effects on the odds of being married and unemployed, smaller effects on income and age specific effects on being in a de facto relationship.     

Life Satisfaction Among Turkish and Moroccan Immigrants in the Netherlands: The Role of Absolute and Relative Income

In this paper we investigate the role of several socio-economic and non-economic factors such as absolute and relative income, education and religion to explain the differences of happiness levels of Turkish and Moroccan Immigrants in the Netherlands by using ordered logit model. We focus on members of the Moroccan and Turkish communities, as these are the two largest non-EU immigrant communities in the Netherlands. Our findings reveal that Moroccans, although they have lower income levels and higher unemployment rates than Turkish immigrants, their happiness level is higher than the Turkish immigrants. In order to understand this dilemma a questionnaire survey was performed to 111 Turkish and 96 Moroccan immigrants in Rotterdam, Amsterdam, Den Haag, Utrecht and Arnhem in 2010. The main purpose is to investigate how reference group’s self-reported life satisfaction is related to the level of absolute income; the level of relative income and other socio-economic factors. The main findings are that for Turkish sample relative income is significantly and negatively correlated with life satisfaction whereas, both absolute income (positively) and relative income (negatively) are significantly correlated with life satisfaction for Moroccan case.     

Social Comparisons and Life Satisfaction Across Racial and Ethnic Groups: The Effects of Status,Information and Solidarity

This paper explores the role of within group social comparisons on the life satisfaction of different racial and ethnic groups in the US. For Whites, we find that higher group income levels are associated with lower levels of life satisfaction, a result that is consistent with a preference for within group status. In contrast, life satisfaction is increasing in group income for Blacks. This result is consistent with the existence of social norms that emphasize Black solidarity. It is also consistent with an information effect in which Blacks rely on peer income levels to form expectations regarding their future prospects. We introduce a theoretical framework to help to distinguish between solidarity and information effects. Our empirical results provide strong support for the hypothesis that solidarity rather than information accounts for the positive relationship between average Black income and the subjective wellbeing of US Blacks. Finally, we consider two theories of social solidarity and find support for social salience but not social density in determining the strength of solidarity effects.     

Climbing up the Social Ladders: Identity, Relative Income, and Subjective Well-being

This study incorporates the concept of identity to explain the relationship between relative income and subjective well-being. Based upon the theoretical framework of an identity model developed by Akerlof and Kranton Q J Econ 115:715–753, (2000), the empirical findings of this study suggest that an increase in relative income leads to a gain in positional identity and therefore raises the level of subjective well-being. This approach extends our understanding about the connection between positional concern and subjective well-being and explains the importance of social comparison in shaping individuals’ preferences and tastes. People are concerned about their relative income as it represents a positional identity of social status, dependent upon ideals and norms derived from the interactions between an individual and others within a society.     

城市农民工主观生活质量及其影响因素研究——基于上海浦东新区农民工调查数据的分析

本文基于2006年上海浦东新区农民工生活质量调查数据,对农民工的主观生活质量及其影响因素进行了研究。分析结果表明,1/3以上农民工对自己的总体生活质量表示满意;农民工的婚姻状况、月平均收入、居住类型和健康状况因素对其生活质量总体满意度有显著的影响,性别、年龄、受教育程度和居住时间因素对其生活质量总体满意度的影响不显著;通过因子分析得到的"工作和保障满意度"和"生活环境满意度"对农民工的生活质量总体满意度的影响最为显著。     

A test of the Easterlin fertility model using income

An important dimension of Easterlin's seminal work on fertility is the hypothesis of intergenerational taste formation, or the relative income hypothesis. Previous estimates have not had data on income in two generations, so the estimated own-income effects may have had a downward bias. This article uses data with income from two generations to estimate the Easterlin model directly. Own income is still not positively significant. A simple single-equation test is developed to distinguish this model from a Becker intergenerational serially correlated endowments model that he claims is observationally equivalent. The test results favor the Becker formulation.     

Development of the Contentment with Life Assessment Scale (CLAS): Using Daily Life Experiences to Verify Levels of Self-Reported Life Satisfaction

On average, Anglo-Americans report that they are satisfied with their lives, but their global evaluations tend to deviate from their daily experiences (e.g., Oishi [2002, Personality and Social Psychology Bulletin 28(10), 1398–1406]). We explored the hypothesis that the average life satisfaction of Anglo-Americans is better characterized as neutral than satisfied. In Study 1 we developed the five-item Contentment with Life Assessment Scale (CLAS), which focuses on contentment, fulfillment and self-discrepancies. Normative data based on three general population samples demonstrated that the CLAS produces a close to normal distribution of scores, has excellent reliability, and is sensitive to differences in life conditions (e.g., income, marital status). In two daily diary studies we tested whether global life satisfaction measures corresponded to people’s daily subjective well-being. The CLAS was the best predictor among three self-report life satisfaction measures of daily escapist behaviors including television watching and alcohol consumption, and daily stress-related physical symptoms (Study 2). In Study 3, participants recorded their level of life satisfaction daily for two weeks. Average daily life satisfaction scores clustered close to the neutral rather than satisfied point of the measurement scale.     

A panel study of migration,self-selection and household real income

The impact of migration on income for Swedish multi-adult households is examined using panel data pertaining to a sample of stable household constellations during the period 1980–1990. In contrast to previous studies, data on household disposable income is employed in estimating the income function. The empirical results indicate no significant effect on real disposable income from migration. In addition, the hypothesis of no self-selection, or zero correlation between the errors in the decision function and the income function, cannot be rejected. Received: 10 May 1995 / Accepted: 14 August 1996     

Does money buy satisfaction?

There was no change in the distribution of satisfaction with the standard of living among Detroit area wives between 1955 and 1971, although current-dollar median family income more than doubled and constant-dollar income increased by forty per cent. Cross-sectional variation in satisfaction is, however, related to income and, in particular, to relative position in the income distribution. Whereas regressions of satisfaction on income in current or constant dollars, or the logarithm thereof, suggest that at the same income there was less satisfaction in 1971 than in 1955, there is no significant year effect in the equation using the income-position variable. Easterlin's thesis that rising levels of income do not produce rises in the average subjective estimate of welfare is supported. The thesis raises difficult questions for students of subjective social indicators.     

Relative Deprivation,Satisfying Rationality,and Support for Redistribution

Why do individuals support redistribution? Many studies have investigated the factors that influence support for redistribution; however, none have confirmed the role of income satisfaction. The aim of this study is to explore the role of income satisfaction in its support of the mechanism for redistribution. In this study, I suggest relative deprivation theory and the concept of satisfying rationality , as both give income satisfaction a theoretical position. Based on this framework, I argue that income satisfaction could be an indicator of relative deprivation and is understood as the basis of rational action. Specifically, I suggest the mechanism of relative deprivation that a feeling of unfairness weakens income satisfaction, and deterioration in income satisfaction leads individuals to support redistribution. To support this argument, I conduct multilevel path analysis using World Value Survey 6 waves focusing on the OECD countries. I first examine the direct effect of income satisfaction on support for redistribution and find a statistical association between income satisfaction and support for redistribution. Then, I check the relationship between income satisfaction and feeling of unfairness to validate income satisfaction as an indicator of relative deprivation. These findings imply that scholars need to pay more attention to the substantial role of individuals’ subjective reaction to the objective economic conditions.