Abstract
This paper evaluates the relative impact of different types of benchmarks such as internal and external comparisons on subjective well-being in Turkey. There are few studies on life satisfaction for Turkey and they mostly focus on the impact of socio-demographic effects on subjective well-being. The main purpose of this paper is to investigate how reference group’s self-reported life satisfaction is related to the level of consumption; as well as the level of internal and external comparisons and other socio-economic factors. The paper relies on the Life in Transition Survey (EBRD 2011), a survey conducted in late 2010 jointly by the European Bank for Reconstruction and Development and the World Bank. The survey includes 1,003 observations for Turkey. The emphasis of the paper is based on the concept of income comparisons—both to others in the relevant reference group and to oneself in the past (evaluation) and future (expectation). The main findings are; in addition to household consumption, internal and external comparisons have significant impact on life satisfaction. The impact of comparisons is asymmetric: in most cases under-performing one’s benchmark has a greater effect than out-performing it.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
A detailed literature review of economics and happiness can be found in Frey and Stutzer (2002).
Especially several scholars observed that per-capita income in western countries like the United States, the United Kingdom, and Belgium, as well as Japan, has risen sharply in recent decades, whereas average happiness has stayed “virtually constant” or has even declined over the same period. See for details: Blanchflower and Oswald (2004), Diener and Oishi (2000), Myers (1993), Kenny (1999, 2004), Easterlin (1974, 1995), and Diener et al. (1995).
It was Festinger (1954) who used the term “social comparison” for the first time.
All above happiness variants are based on responses to a survey question like: “Taking all together, how satisfied or dissatisfied you with your life-as-a-whole are these days?” Combined question types 10-step numeral life satisfaction and 11-step numeral life satisfaction. For a detailed study on life satisfaction and happiness in Turkey see: Selim (2008).
According to Life In Transition Survey (2011), the standard of living is measured using a series of questions regarding household expenditure during the past 12 months based on an comprehensive list of several items including Food, beverages and tobacco; Utilities (electricity, water, gas, heating, fixed line phone); Transportation (public transportation, fuel for car); Education (including tuition, books, kindergarten expenses); Health (including medicines and health insurance); and Clothing and footwear Durable goods (e.g. furniture, household appliances: TV, car, etc.)
References
Blanchflower, D., & Oswald, A. (2004). Well-being over time in Britain and the USA. Journal of Public Economics, 88, 1359–1386.
Campbell, A., Converse, P. E., & Rodgers, W. L. (1976). The quality of American life: Perceptions, valuations, and satisfactions. New York: Russell Sage Foundation.
Diener, E., Diener, M., & Diener, C. (1995). Factors predicting the subjective well-being of nations. Journal of Personality and Social Psychology, 69(5), 851–864.
Diener, E., & Oishi, S. (2000). Money and happiness: Income and subjective well-being across nations. In E. Diener & E. Suh (Eds.), Subjective well-being across cultures (pp. 185–218). Cambridge, MA, USA: MIT Press.
Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research, 28(3), 195–223.
Dusenberry, J. S. (1949). Income, saving and the theory of consumer behaviors. Cambridge: Harvard University Press.
Easterlin, R. (1974). Does economic growth improve the human lot? In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth: Essays in honor of Moses Abramovitz. New York: Academic Press.
Easterlin, R. (1995). Will raising the incomes of all increase the happiness of all? Journal of Economic Behavior and Organization, 27(1), 35–48.
Easterlin, R. (2001) Income and happiness: Towards a unified theory. The Economic Journal, 111(473), 465–484.
EBRD (2011). Life in transition Survey II. http://www.ebrd.com/pages/research/publications/special/transitionII.shtml.
Ferrer-i-Carbonell, A. (2005). Income and well-being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89, 997–1019.
Festinger, L. (1954). A theory of social comparison processes. Human Relations, 7, 117–140.
Frank, R. H. (1985a). Choosing the right pond: Human behavior and the quest for status. New York: Oxford University Press.
Frank, R. H. (1985b). The demand for unobservable and other non positional goods. American Economic Review, 75, 101–116.
Frey, B., & Stutzer, A. (2002). What can economists learn from happiness research? Journal of Economic Literature, XL, 402–435.
Hollander, H. (2001). On the validity of utility statements: standard theory versus duesenberry’s. Journal of Economic Behavior & Organization, 45, 227–249.
Kenny, C. (1999). Does growth cause happiness, or does happiness cause growth? Kyklos, 52(1), 3–26.
Kenny, C. (2004). Does development make you happy? Subjective well-being and economic growth in developing countries. Social Indicators Research, 65, 1–22.
Knight J., Song L., & Gunatilaka R. (2007) Subjective well-being and its determinants in rural China, Department of Economics discussion paper series, Oxford University, No. 334.
McBride, M. (2001). Relative-income effects on subjective well-being in the cross-section. Journal of Economic Behavior & Organization, 45(3), 251–278.
Myers, D. G. (1993). The pursuit of happiness: Who is happy and why? New York: Avon.
Neumark, D., & Postlewaite, A. (1998). Relative income concerns and the rise in married women’s employment. Journal of Public Economy, 70(1), 157–183.
Oswald, A. J. (1997). Happiness and economic performance. Economic Journal, 107, 1815–1831.
Pollak, R. A. (1976). Interdependent preferences. American Economic Review, 66(3), 309–320.
Selim, S. (2008). Life satisfaction and happiness in Turkey. Social Indicators Research, 88, 531–562.
Senik, C. (2009). Direct evidence on income comparisons and their welfare effects. Journal of Economic Behavior & Organization, 72(2009), 408–424.
Stutzer, A. (2004). The role of income aspirations in individual happiness. Journal of Economic Behavior & Organization, 54(1), 89–109.
Veblen T. (1949) The theory of the leisure class, George Allen and Unwin, London [Originally published in 1899 by Macmillan, New York].
Veenhoven, R. (1991). Is happiness relative? Social Indicators Research, 24, 1–34.
Veenhoven, R. (2012). Happiness in Turkey (TR), world database of happiness. Rotterdam: Erasmus University.
Weiss, Y., & Fershtman, C. (1998). Social status and economic performance: A survey. European Economic Review, 42(3–5), 801–820.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Dumludag, D. Life Satisfaction and Income Comparison Effects in Turkey. Soc Indic Res 114, 1199–1210 (2013). https://doi.org/10.1007/s11205-012-0197-3
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11205-012-0197-3