There are a variety of studies that show that absolute income is positively correlated with individual well-being, but find at the same time that average income of the reference group (comparison income) affects individual well-being most often negatively (Clark et al., 2008). Although the results allover the literature are quite consistent, there is a large variety how the reference group is defined. For example, some authors assume that people compare themselves with people living in the same area (Luttmer, 2005; Graham & Felton, 2006) or with people inside the same age range (McBride, 2001). Others define the
reference group more precisely and assume that people compare themselves with people of same age, same education and same area of living (Ferrer-i-Carbonell, 2005). However, to the best of my knowledge, there is no systematic empirical research on the impact of different reference group specifications on life satisfaction in happiness regressions. Therefore, I investigate in this master thesis to what extent different reference group specifications alter the statistical impact of comparison income on happiness regarding sign, magnitude and statistical significance. The results show that the specification of the reference group matters, since some specifications produce significant and others produce insignificant coefficients. However, the results also show that the sub-sample treated has a considerable impact on sign and statistical significance of the reference groups defined.
| Identifer | oai:union.ndltd.org:DRESDEN/oai:qucosa.de:bsz:15-qucosa-147069 |
| Date | 03 July 2014 |
| Creators | Hindermann, Christoph |
| Contributors | Universität Leipzig, Wirtschaftswissenschaftliche Fakultät, Prof. Dr. Thomas Steger, Prof. Dr. Thomas Steger |
| Publisher | Universitätsbibliothek Leipzig |
| Source Sets | Hochschulschriftenserver (HSSS) der SLUB Dresden |
| Language | English |
| Detected Language | English |
| Type | doc-type:masterThesis |
| Format | application/pdf |
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