Income and happiness across Europe: Do reference values matter?
Using cross-sectional data from the first two rounds of the European Social Survey (ESS), we examine the relationship between income, relative income and happiness across 19 European countries. We find that a positive and statistically significant relationship between income and happiness does exist, but such a relationship is weakened by reference income. We also find that while reference income exerts a negative impact on happiness in the case of Western European countries, its effect is positive in the case of the Eastern European countries, a finding that is consistent with the 'tunnel effect' hypothesis. This suggests that for Eastern Europeans reference income is likely to be a source of information for forming expectations about their future economic prospects, rather than a yardstick measure for social comparisons.
Year of publication: |
2009
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Authors: | Caporale, Guglielmo Maria ; Georgellis, Yannis ; Tsitsianis, Nicholas ; Yin, Ya Ping |
Published in: |
Journal of Economic Psychology. - Elsevier, ISSN 0167-4870. - Vol. 30.2009, 1, p. 42-51
|
Publisher: |
Elsevier |
Keywords: | Comparison income Reference groups Happiness Life satisfaction |
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