Title

Reference Group Inequality, Positional Goods, and Their Impact on Subjective Well-Being: Evidence from Turkey

Campus

Dahlonega

Publication date

12-2021

Publisher

Routledge

Book or Journal Information

Review of Social Economy, 79(4), 636-663

Keywords

Happiness, Comparison effects, Positional goods, Inequality

Abstract

Using the 2013 Turkish Life Satisfaction Survey, we investigate two hypotheses that are novel to the happiness literature. The first of these hypotheses is that income dispersion/inequality within an individual’s reference group has a negative effect on happiness, ceteris paribus; we find evidence to support this hypothesis. The second hypothesis is that housing is a positional good that has a negative positional externality; we find evidence to support this hypothesis as well. Additionally, we explore the notion that non-pecuniary factors (like social life satisfaction) carry more weight in explaining happiness than do standard pecuniary factors (such as an individual’s own income). Our findings suggest that in large part, the path to a happy life is through gaining access to a wealth of non-pecuniary characteristics. In a broad sense, our study explores the significance that comparison effects in the pecuniary domain can have on individual happiness.

Author Biography

Joel M. Potter is a professor of economics in the Mike Cottrell College of Business at the University of North Georgia. He has active academic interests in the economics of sports as well as the economics of inequality. He has become increasingly more engaged in studying political and economic inequality between men and women. Joel is Lara Polangco Potter’s husband. They are raising their five children in rural north Georgia.

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Reference Group Inequality, Positional Goods, and Their Impact on Subjective Well-Being: Evidence from Turkey

Using the 2013 Turkish Life Satisfaction Survey, we investigate two hypotheses that are novel to the happiness literature. The first of these hypotheses is that income dispersion/inequality within an individual’s reference group has a negative effect on happiness, ceteris paribus; we find evidence to support this hypothesis. The second hypothesis is that housing is a positional good that has a negative positional externality; we find evidence to support this hypothesis as well. Additionally, we explore the notion that non-pecuniary factors (like social life satisfaction) carry more weight in explaining happiness than do standard pecuniary factors (such as an individual’s own income). Our findings suggest that in large part, the path to a happy life is through gaining access to a wealth of non-pecuniary characteristics. In a broad sense, our study explores the significance that comparison effects in the pecuniary domain can have on individual happiness.