The Journal of Economic Inequality

, Volume 10, Issue 2, pp 219–238 | Cite as

Subjective well-being and reference-dependence: Insights from Mexico

Article

Abstract

Data from Mexico are used to examine whether two indicators of subjective well-being—income satisfaction and income adequacy—correlate not only with the respondent’s absolute level of income, but also with their assessment of how their income compares relative to the income of a reference group, the level of income they hoped to have achieved by that stage of their life, and the income they had three years earlier. Both subjective well-being indicators correlate positively with the ranking relative to all three reference points. Some of the findings differ across segments of the income distribution. Subjective well-being assessments of the poor are influenced more by the inability to achieve income aspirations, while differences with respect to others is a more prominent factor among non-poor respondents.

Keywords

Aspirations Reference dependence Subjective well-being 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Arranz, J.M., Canto, O.: Measuring the effect of spell recurrence on poverty dynamics: evidence from Spain. J. Econ. Inequal. (2011). doi:10.1007/s10888-011-9191-2 Google Scholar
  2. 2.
    Blanchflower, D.G., Oswald, A.J.: Well-being over time in Britain and the USA. J. Public Econ. 88(7–8), 1359–86 (2004)CrossRefGoogle Scholar
  3. 3.
    Bossert, W., Chakravarty, S.R., D’Ambrosio, C.: Poverty and time. J. Econ. Inequal. (2011). doi:10.1007/s10888-011-9175-2 Google Scholar
  4. 4.
    Carlsson, F., Johansson-Stenman, O., Martinsson, P.: Do you enjoy having more than others? survey evidence of positional goods. Economica 74, 586–98 (2007)CrossRefGoogle Scholar
  5. 5.
    Carlsson, F., Gupta, G., Johansson-Stenman, O.: Keeping up with the Vaishyas? caste and relative standing in India. Oxf. Econ. Papers 61, 52–73 (2009)CrossRefGoogle Scholar
  6. 6.
    Clark, A., Frijters, P., Shields, M.: Relative income, happiness and utility: an explanation for the Easterlin Paradox and other puzzles. J. Econ. Lit. 46, 95–144 (2008)CrossRefGoogle Scholar
  7. 7.
    Clark, A., Oswald, A.: Satisfaction and comparison income. J. Public Econ. 61, 359–81 (1996)CrossRefGoogle Scholar
  8. 8.
    Clark, A., Senik, C.: Who compares to whom? the anatomy of income comparisons in Europe. Econ. J. 120, 573–594 (2010)CrossRefGoogle Scholar
  9. 9.
    CONEVAL.: Aplicacion de la Metodologia del Comité Tecnico para la Medicion de la Pobreza en Mexico 2000–2005. Nota Tecnica 01/2006 (2006)Google Scholar
  10. 10.
    Easterlin, R.A.: Income and happiness: towards a unified theory. Econ. J. 111(473), 465–484 (2001)CrossRefGoogle Scholar
  11. 11.
    Easterlin, R.A.: Explaining happiness. Proc. Natl. Acad. Sci. 100(19), 11176–11183 (2003)CrossRefGoogle Scholar
  12. 12.
    Easterlin, R.A.: A puzzle for adaptive theory. J. Econ. Behav. Organ. 56(4), 513–521 (2005)CrossRefGoogle Scholar
  13. 13.
    Falk, A., Knell, M.: Choosing the Joneses: endogenous goals and reference standards. Scand. J. Econ. 106, 417–35 (2004)CrossRefGoogle Scholar
  14. 14.
    Festinger, L.: A theory of social comparison processes. Hum. Relat. 7, 117–140 (1954)CrossRefGoogle Scholar
  15. 15.
    Ferrer-i-Carbonell, A., Frijters, P.: How important is methodology for the estimates of the determinants of happiness? Econ. J. 114, 641–659 (2004)CrossRefGoogle Scholar
  16. 16.
    Ferrer-i-Carbonell, A.: Income and well-being: an empirical analysis of the comparison income effect. J. Public Econ. 89(2005), 997–1019 (2005)CrossRefGoogle Scholar
  17. 17.
    Gastorf, J., Suls, J.: Performance evaluation via social comparison: performance similarity versus related-attribute similarity. J. Soc. Psychol. 41(4), 297–305 (1978)CrossRefGoogle Scholar
  18. 18.
    Gandhi, G., Knight, J.: Subjective well-being poverty vs. income poverty and capabilities poverty? J. Dev. Stud. 42(7), 1199–1224 (2006)CrossRefGoogle Scholar
  19. 19.
    Hoy, M., Thombson, B., Zheng, B.: Empirical issues in lifetime poverty measurement. J. Econ. Inequal. (2011). doi:10.1007/s10888-011-9192-1 Google Scholar
  20. 20.
    Johansson-Stenman, O., Martinsson, P.: Honestly, why are you driving a BMW? J. Econ. Behav. Organ. 60, 129–46 (2006)CrossRefGoogle Scholar
  21. 21.
    Kahneman, D., Tversky, A.: Advances in prospect theory. J. Risk Uncertainty 5, 297–323 (1992)CrossRefGoogle Scholar
  22. 22.
    Kahneman, D., Krueger, A.: Developments in the measurement of subjective well-being. J. Econ. Perspect. 20(1), 3–24 (2006)CrossRefGoogle Scholar
  23. 23.
    Koszegi, B., Rabin, M.: A model of reference-dependent preferences. Q. J. Econ. CXXI(4), 1133–1165 (2006)Google Scholar
  24. 24.
    Lokshin, M, Umapathi, N., Paternostro, S.: Robustness of subjective welfare analysis in a poor developing country: Madagascar 2001. J. Dev. Stud. 42(4), 559–591 (2006)CrossRefGoogle Scholar
  25. 25.
    Ravallion, M., Lokshin, M.: Who cares about relative deprivation? J. Econ. Behav. Organ. 73, 171–185 (2010)CrossRefGoogle Scholar
  26. 26.
    Rojas, M.: Experienced poverty and income poverty in Mexico: A subjective well-being approach. World Dev. 36(6), 1078–1093 (2008)CrossRefGoogle Scholar
  27. 27.
    Solnick, S.J., Hemenway, D.: Is more always better? A survey about positional concerns. J. Econ. Behav. Organ. 37(3), 373–83 (1998)CrossRefGoogle Scholar
  28. 28.
    Solnick, S., Hemenway, D.: Are positional concerns stronger in some domains than in others? Am. Econ. Rev., Papers Proc. 45, 147–51 (2005)CrossRefGoogle Scholar
  29. 29.
    Stutzer, A.: The role of income aspirations in individual happiness. J. Econ. Behav. Organ. 54, 89–109 (2004)CrossRefGoogle Scholar
  30. 30.
    Van Praag, B., Flik, R.J.: Subjective poverty line definitions. De Economist 139(3), 311–330 (1991)CrossRefGoogle Scholar
  31. 31.
    World Development indicators database. World BankGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC. 2012

Authors and Affiliations

  1. 1.Colgate UniversityHamiltonUSA

Personalised recommendations