Perceptions of inequality through social comparisons and transference on subjective wellbeing: a micro perspective on reference groups
Agricultural Economics, Agricultural Policy, Agricultural Sociology
Final Report Abstract
Inequality negatively affects the social cohesion of societies – particularly in areas undergoing structural changes. How individuals perceive their situation in comparison to others influences their perception of inequality and, hence, individual subjective wellbeing. The link between inequality and subjective wellbeing is conceptually established through social comparisons to reference groups. From the economic viewpoint, it is associated with the Relative Deprivation Theory. One critical methodological weakness within relative deprivation research is the use of exogenously pre-defined collectives to define reference groups and deduce comparisons from them. This project aimed to address this weakness by adding a subjective lens to empirically capture the actual perceptions of the individuals who make income comparisons. For this purpose, we developed an innovative survey instrument to identify individualised respondent-defined income reference groups. The so-called name generator, an empirically proven instrument from social network research, was adapted to this end. The empirically measured respondentdefined reference groups were assessed against standard pre-defined reference collectives regarding their relationship to subjective wellbeing. Our regression results underline that respondent-defined measures are more effective in explaining subjective wellbeing than researcher-defined measures. Furthermore, we present rare insights into the actual composition of reference groups. Reference persons come from various social groups, including relatives, colleagues, or persons only known through social media. Reference groups are relatively uniform across respondents' socioeconomic spectrum but differ across geographical spaces and life trajectories. Initial results showed weak evidence that perceived income inequality better explains subjective wellbeing than objective measures. However, the lower the discrepancy between perceived inequality and a person’s preferred level of societal inequality – we named this ‘fair inequality’, the higher becomes the reported subjective wellbeing. Furthermore, subjective and objective income inequality measures do not necessarily replace one another but are complementary as they fulfil different informational needs. Finally, we found clear evidence for the often-quoted tunnel effect in the analysis of income reference groups: people who compared upward felt optimistic about their future income. This evidence was not evident in our analysis of perceived inequality. However, the tunnel effect appeared again after adding interaction terms: subjective wellbeing increased with the perception of higher inequality in interaction with, for instance, a higher degree of agency (control over life). This indicates that the tunnel effect is present but hidden by individual heterogeneity.
Publications
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Who do we compare ourselves to? Survey evidence on reference individuals. 17th annual conference of The International Society for Quality-of-Life Studies (ISQOLS), Granada, Spain.
Jantsch, A.; Dufhues, T.; Möllers, J. & Buchenrieder, G.
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Don’t Look Up! Individual Income Comparisons and Subjective Well-Being of Students in Thailand. Journal of Happiness Studies, 24(2), 477-503.
Dufhues, Thomas; Möllers, Judith; Jantsch, Antje; Buchenrieder, Gertrud & Camfield, Laura
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Individual heterogeneity and perceptions matter: an analysis of income inequality and subjective well-being. Research Square Platform LLC.
Dufhues, Thomas; Buchenrieder, Gertrud; Möllers, Judith & Jantsch, Antje
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The COVID-19 pandemic, individual reference groups, income comparison patterns and subjective well-being. 21st annual conference of The International Society for Quality-of-Life Studies (ISQOLS), Rotterdam, Netherlands.
Jantsch, A.; Buchenrieder, G.; Dufhues, T. & Möllers, J.
