Social Indicators Research

, Volume 88, Issue 3, pp 497–529 | Cite as

Absolute Income, Relative Income, and Happiness

  • Richard BallEmail author
  • Kateryna Chernova


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.


Subjective well-being Happiness Relative income 



For helpful discussion and comments, we would like to thank Gabriela Catterberg, Ellsworth Dägg, Picard Janné, Christopher Kilby, Vladimir Kontorovich, and Anne Preston; participants in the Behavioral Research Council’s symposium on Behavioral Economics and Neoclassical Economics, July 2002, Great Barrington, MA; and participants in the 6th International Conference of the International Society for Quality of Life Studies, November 2004, Philadelphia, PA.


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Copyright information

© Springer Science+Business Media B.V. 2007

Authors and Affiliations

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

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