Social Indicators Research

, Volume 106, Issue 3, pp 471–489 | Cite as

Income Comparisons Among Neighbours and Satisfaction in East and West Germany

  • Gundi KniesEmail author


A series of studies have suggested that changes in others’ income may be perceived differently in post-transition and capitalist societies. This paper draws on the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics in very tightly drawn neighbourhoods to investigate whether reactions to changes in their neighbours’ income divide the German nation. We find that the neighbourhood income effect for West Germany is negative (which is in line with the ‘relative income’ hypothesis) and slightly more marked in neighbourhoods that may be assumed to be places where social interactions between neighbours take place. In contrast, the coefficients on neighbourhood income in East Germany are positive (which is consistent with the ‘signalling’ hypothesis), but statistically not significant. This suggests not only that there is a divide between East and West Germany, but also that neighbours may not be a relevant comparison group in societies that have comparatively low levels of neighbouring.


Comparison income Reference group Life satisfaction Neighbourhood effects Panel data analysis 



This research was supported by core funding from the University of Essex and the UK Economic and Social Research Council for the Research Centre on Micro-Social Change at the Institute for Social and Economic Research. I gratefully acknowledge comments from Amanda Sacker, Stephen Jenkins, and two anonymous reviewers.


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Copyright information

© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  1. 1.Institute for Social and Economic ResearchUniversity of EssexColchesterUK

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