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The relative income hypothesis: A comparison of methods

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  • Brown, Sarah
  • Gray, Daniel
  • Roberts, Jennifer
Abstract
Studies of the relative income hypothesis find positive and negative effects of relative income. To facilitate comparisons we use a large household panel and highlight the sensitivity of the relative income effect to the definition of the reference group and to the estimation strategy employed.

Suggested Citation

  • Brown, Sarah & Gray, Daniel & Roberts, Jennifer, 2015. "The relative income hypothesis: A comparison of methods," Economics Letters, Elsevier, vol. 130(C), pages 47-50.
    • Handle: RePEc:eee:ecolet:v:130:y:2015:i:c:p:47-50
    DOI: 10.1016/j.econlet.2015.02.031
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    1. We don't want economic growth
      by chris in Stumbling and Mumbling on 2020-01-26 13:40:47

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    5. Fumagalli, Elena & Fumagalli, Laura, 2022. "Subjective well-being and the gender composition of the reference group: Evidence from a survey experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 196-219.
    6. HAURET Laetitia & WILLIAMS Donald R., 2017. "Choice of colleagues as reference group for wage comparison: does group composition matter?," LISER Working Paper Series 2017-10, Luxembourg Institute of Socio-Economic Research (LISER).
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    8. David Brady & Michaela Curran & Richard Carpiano, 2023. "A test of the predictive validity of relative versus absolute income for self-reported health and well-being in the United States," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 48(26), pages 775-808.
    9. La, Binh Thanh & Lim, Steven & Cameron, Michael P. & Tran, Tuyen Quang & Nguyen, Minh Thi, 2021. "Absolute income, comparison income and subjective well-being in a transitional country: Panel evidence from Vietnamese household surveys," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 368-385.
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    More about this item

    Keywords

    Relative income; Reference group; Subjective well-being;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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