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The Effect of Relative Income Concerns on Life Satisfaction: Relative Deprivation and Loss Aversion.

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Title: The Effect of Relative Income Concerns on Life Satisfaction: Relative Deprivation and Loss Aversion.
Authors: Leites, Martín (AUTHOR), Ramos, Xavier (AUTHOR)
Source: Journal of Happiness Studies. Oct2022, Vol. 23 Issue 7, p3485-3515. 31p. 11 Charts.
Subjects: Life satisfaction, Loss aversion, Income, Prospect theory, Middle-income countries
Abstract: Income comparisons are important for individual well-being. We examine the shape of the relationship between relative income and life satisfaction, and test empirically if the features of the value function of prospect theory carry over to experienced utility. We draw on a unique panel dataset for a middle-income country that allows us to work with an endogenous reference income, which differs for individuals with the same observable characteristics depending on the perception error about their relative position in the distribution. We find the value function for experienced utility to be concave for both positive and, at odds with prospect theory, also negative relative income. Loss aversion holds only for incomes that are sufficiently distant from the reference income. Our heterogeneity analysis shows that the slope of the value function is contingent on people's personality, social beliefs, and how much they care about income comparisons. [ABSTRACT FROM AUTHOR]
Copyright of Journal of Happiness Studies is the property of Springer Nature and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Database: Psychology and Behavioral Sciences Collection
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  Data: The Effect of Relative Income Concerns on Life Satisfaction: Relative Deprivation and Loss Aversion.
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  Data: <searchLink fieldCode="AR" term="%22Leites%2C+Martín%22">Leites, Martín</searchLink> (AUTHOR)<br /><searchLink fieldCode="AR" term="%22Ramos%2C+Xavier%22">Ramos, Xavier</searchLink> (AUTHOR)
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  Data: <searchLink fieldCode="JN" term="%22Journal+of+Happiness+Studies%22">Journal of Happiness Studies</searchLink>. Oct2022, Vol. 23 Issue 7, p3485-3515. 31p. 11 Charts.
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  Data: <searchLink fieldCode="DE" term="%22Life+satisfaction%22">Life satisfaction</searchLink><br /><searchLink fieldCode="DE" term="%22Loss+aversion%22">Loss aversion</searchLink><br /><searchLink fieldCode="DE" term="%22Income%22">Income</searchLink><br /><searchLink fieldCode="DE" term="%22Prospect+theory%22">Prospect theory</searchLink><br /><searchLink fieldCode="DE" term="%22Middle-income+countries%22">Middle-income countries</searchLink>
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  Data: Income comparisons are important for individual well-being. We examine the shape of the relationship between relative income and life satisfaction, and test empirically if the features of the value function of prospect theory carry over to experienced utility. We draw on a unique panel dataset for a middle-income country that allows us to work with an endogenous reference income, which differs for individuals with the same observable characteristics depending on the perception error about their relative position in the distribution. We find the value function for experienced utility to be concave for both positive and, at odds with prospect theory, also negative relative income. Loss aversion holds only for incomes that are sufficiently distant from the reference income. Our heterogeneity analysis shows that the slope of the value function is contingent on people's personality, social beliefs, and how much they care about income comparisons. [ABSTRACT FROM AUTHOR]
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  Data: <i>Copyright of Journal of Happiness Studies is the property of Springer Nature and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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        Value: 10.1007/s10902-022-00555-w
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      – Code: eng
        Text: English
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        PageCount: 31
        StartPage: 3485
    Subjects:
      – SubjectFull: Life satisfaction
        Type: general
      – SubjectFull: Loss aversion
        Type: general
      – SubjectFull: Income
        Type: general
      – SubjectFull: Prospect theory
        Type: general
      – SubjectFull: Middle-income countries
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      – TitleFull: The Effect of Relative Income Concerns on Life Satisfaction: Relative Deprivation and Loss Aversion.
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              Text: Oct2022
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