Social Indicators Research

, Volume 88, Issue 3, pp 497–529

Absolute Income, Relative Income, and Happiness

Article

DOI: 10.1007/s11205-007-9217-0

Cite this article as:
Ball, R. & Chernova, K. Soc Indic Res (2008) 88: 497. doi:10.1007/s11205-007-9217-0

Abstract

This paper uses data from the World Values Survey to investigate how an individual’s self-reported happiness is related to (i) the level of her income in absolute terms, and (ii) the level of her income relative to other people in her country. The main findings are that (i) both absolute and relative income are positively and significantly correlated with happiness, (ii) quantitatively, changes in relative income have much larger effects on happiness than do changes in absolute income, and (iii) the effects on happiness of both absolute and relative income are small when compared to the effects several non-pecuniary factors.

Keywords

Subjective well-beingHappinessRelative income

Copyright information

© Springer Science+Business Media B.V. 2007

Authors and Affiliations

  1. 1.Department of EconomicsHaverford CollegeHaverfordUSA
  2. 2.Exelon CorporationKennett SquareUSA