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Income and happiness across Europe: Do reference values matter?

Authors :
Yannis Georgellis
Guglielmo Maria Caporale
Nicholas Tsitsianis
Ya Ping Yin
Source :
Journal of Economic Psychology. 30:42-51
Publication Year :
2009
Publisher :
Elsevier BV, 2009.

Abstract

Using data from the European Social Survey (ESS), we examine the link between income and subjective well-being. We find that, for the whole sample of nineteen European countries, although income is positively correlated with both happiness and life satisfaction, reference income exerts a negative effect on individual well-being, a result consistent with the relative utility hypothesis. Performing separate analyses for some Eastern European countries, we also find some evidence of a ‘tunnel effect’, in that reference income has a positive impact on subjective well-being. Our findings support the view that in environments with stable income and employment, reference income serves as a basis for social comparisons, whereas in relatively volatile environments, it is used as a source of information for forming expectations about future status.

Details

ISSN :
01674870
Volume :
30
Database :
OpenAIRE
Journal :
Journal of Economic Psychology
Accession number :
edsair.doi.dedup.....56ff552859125913818d77ec542f7475
Full Text :
https://doi.org/10.1016/j.joep.2008.06.004