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Subjective well-being and relative deprivation

Conchita D'Ambrosio

"This paper explores the relationship between two well-established concepts of measuring individual well-being: the concept of happiness, i.e. self-reported level of satisfaction with income and life, and relative deprivation/satisfaction, i.e. the gaps between the individual's income and the incomes of all individuals richer/poorer than him. Operationalizing both concepts using micro panel data from the German Socio-Economic Panel (SOEP), we provide empirical evidence for subjective well-being depending more on relative satisfaction than on absolute levels of income. This finding holds even after controlling for other influential factors in a multivariate setting"--Forschungsinstitut zur Zukunft der Arbeit web site.

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