Income and happiness across Europe: do reference values matter?

Caporale, Guglielmo Maria, Georgellis, Yannis, Tsitsianis, Nicholas and Yin, Ya Ping (2009) Income and happiness across Europe: do reference values matter? Journal of Economic Psychology, 30(1), pp. 42-51. ISSN (print) 0167-4870

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Abstract

Using cross-sectional data from the first two rounds of the European Social Survey (ESS), we examine the relationship between income, relative income and happiness across 19 European countries. We find that a positive and statistically significant relationship between income and happiness does exist, but such a relationship is weakened by reference income. We also find that while reference income exerts a negative impact on happiness in the case of Western European countries, its effect is positive in the case of the Eastern European countries, a finding that is consistent with the ?tunnel effect? hypothesis. This suggests that for Eastern Europeans reference income is likely to be a source of information for forming expectations about their future economic prospects, rather than a yardstick measure for social comparisons.

Item Type: Article
Uncontrolled Keywords: cmparison income, reference groups, happiness, life, satisfaction
Research Area: Accounting and finance
Business and management studies
Economics and econometrics
Psychology
Faculty, School or Research Centre: Faculty of Business and Law
Faculty of Business and Law > Centre for Research in Employment, Skills and Society (CRESS)
Faculty of Business and Law > Kingston Business School (Leadership, HRM and Organisation) (until July 2013)
Depositing User: Katrina Clifford
Date Deposited: 29 Sep 2011 15:17
Last Modified: 29 Sep 2011 15:17
URI: http://eprints.kingston.ac.uk/id/eprint/21051

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