Relative Standing and Subjective Well-Being in South Africa: The Role of Perceptions, Expectations and Income Mobility
- First Online:
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.
KeywordsSubjective well-being Relative standing Perceptions Expectations Income mobility South Africa
- Easterlin, R. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth: Essays in honor of Moses Abramovitz (pp. 89–125). New York: Academic Press.Google Scholar
- Luttmer, E. F. P. (2005). Neighbors as negatives: Relative earnings and well-being. The Quarterly Journal of Economics, 120(3), 963–1002.Google Scholar
- Møller, V. (1989). Can’t get no satisfaction: Quality of life in the 1980s. Indicator South Africa, 7(1), 43–46.Google Scholar
- Pillay, U., Roberts, B., & Rule, S. (Eds.). (2006). South African social attitudes: Changing times, diverse voices. Pretoria: HSRC Press.Google Scholar
- Posel, D., & Casale, D. (2010). Language proficiency and language policy in South Africa: Findings from new data. International Journal of Educational Development. doi:10.1016/j.ijedudev.2010.09.003.
- Powdthavee, N. (2007b). Happiness and the standard of living: The case of South Africa. In L. Bruni & P. L. Porta (Eds.), Handbook on the Economics of Happiness. US/UK: Edward Elgar Publishing.Google Scholar
- Shields, M., Wooden, M. (2003). Marriage, children and subjective well-being. Paper presented at the Eighth Australian Institute of Family Studies Conference—‘Step Forward for Families: Research, Practice and Policy’, Melbourne Exhibition Centre, 12–14 February 2003.Google Scholar
- Stutzer, A., & Frey, B. S. (2010) .Recent advances in the economics of individual subjective well-being. Institute for the Study of Labour (IZA) Discussion Paper No. 4850.Google Scholar