Frustrated Achievers: Winners, Losers and Subjective Well-Being in New Market Economies

Abstract

To date the literature on subjective well-being has focused on the developed economies. We provide empirical evidence from two emerging market countries, Peru and Russia. Our results - and in particular a strong negative skew in the assessments of the respondents with the greatest income gains - support the importance of relative rather than absolute income differences. Among other factors, we attribute our results to shifts in reference norms and to macroeconomic volatility. Relative differences seem to matter more for those in the middle of the distribution than for the very wealthy or the very poor. Our respondents were more critical in assessing their progress vis-a-vis others in their country versus those in their community. The large and consistent gap we find between objective income trends and the subjective assessments of the upwardly mobile may have implications for the future economic and political behaviour of a group that is critical to the sustainability of market policies.subjective well-being, Peru, Russia, relative income differences, sustainability of market policies,

Subjective well-being in China, 2005–2010: The role of relative income, gender, and location

“…6 For urban China, Smyth and Qian (2008) find that those who perceive income distribution to be unequal report lower levels of happiness. 7 Similar evidence is available for two transition economies, Peru and Russia, where relative instead of absolute income differences were found to be more important as determinant of happiness (Graham and Pettinato, 2002). Also see Kingdon and Knight (2007) for South Africa, Carlsson, Gupta and Johansson-Stenman (2009) for India, Ravallion and Lokshin (2010) for Malawi, Asadullah and Chaudhury (2012) for Bangladesh and Guillen-Royo (2011) for Peru.…”

Institutional Origins of Subjective Well-Being: Estimating the Effects of Economic Freedom on National Happiness

“…Although happiness and life satisfaction differ with respect to the emotional versus cognitive aspects, both measures of well-being tend to correlated both across space and time Myers and Diener 1995; and both measures are associated with the perceived extent of opportunities (Veenhoven 2000a;Graham and Pettinato 2002). In this respect, we consider two satisfaction and three opportunity indicators based on Gallup World Poll.…”

Surveying transitional experience and subjective well-being: Income, work, family

“…Graham and Pettinato (2002a) Peru, household panel survey (1998 -2000), Russia, RLMS (1995-1998 Russia, RLMS (1994--2003 Social exclusion (subjective poverty). Ordered probit regressions, ML estimation for 2 simultaneous equations (social exclusion and working in informal sector)…”

“…17. Graham and Pettinato (2002a) Peru, household panel survey (1997 -2000), Russia, RLMS (1995-1998 Economic satisfaction, perceived past economic mobility, Economic Ladder Question. Ordered logit regressions Study of the effects of income and nonincome determinants on economic behaviour and subjective well-being.…”