Local neighbors as positives, regional neighbors as negatives: Competing channels in the relationship between others’ income, health, and happiness

Ifcher, John; Zarghamee, Homa; Graham, Carol

doi:10.1016/j.jhealeco.2017.08.003

Cited by 29 publications

(23 citation statements)

References 47 publications

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“…Such groups may either be defined in spatial terms (e.g. Luttmer, 2005;Kingdon and Knight, 2007;Ifcher et al, 2018), or in terms of similar demographic characteristics, particularly age and education (e.g. McBride, 2001;Ferrer-i Carbonell, 2005;Vendrik and Woltjer, 2007;Vendrik, 2013).…”

Section: Literature Reviewmentioning

confidence: 99%

People do not adapt. New analyses of the dynamic effects of own and reference income on life satisfaction

Kaiser

2020

Journal of Economic Behavior & Organization

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Do people adapt to changes in income? In contradiction to much of the previous literature, I find no evidence of adaptation to income in GSOEP (1984-2015) and UKHLS (1996-2017) data. Furthermore, I find that people also do not adapt to changes in reference income. Instead, reference income effects may be subject to reinforcement over time. Following the empirical approach of Vendrik (2013), I obtain these findings by estimating life satisfaction equations in which contemporaneous and lagged terms for a respondent's own household income and their estimated reference income are simultaneously entered. Additionally, I instrument for own income and include lags of a large set of controls. What was found to be adaptation to raw household income in previous studies turns out to have been driven by reinforcement of an initially small negative effect of household size that grows large over time. Implications of this result for the estimation of equivalence scales with subjective data are discussed.

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Section: Literature Reviewmentioning

confidence: 99%

People do not adapt. New analyses of the dynamic effects of own and reference income on life satisfaction

Kaiser

2020

Journal of Economic Behavior & Organization

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“…Empirical analyses of the relationship between others' income and SWB is divided into two lines of inquiry. 1 The bulk of this literature examines the relationship between measures of central tendency of a reference group's income distribution and SWB (see Ifcher et al (2016) for a review of the neighbors-income-SWB literature). A smaller literature considers the relationship between measures of dispersion and SWB, which is the focus of this paper (see Schneider (2015) for a review of the inequality-SWB literature).…”

Section: Literature Reviewmentioning

confidence: 99%

“…In contrast, the neighbors-income-SWB literature has considered both large and small regions (e.g., ZIP codes). These multi-scale analyses have found that the neighbors-income-SWB relationship is scale-dependent: positive for small regions and negative for large regions (Brodeur & Fleche, 2016;Clark et al, 2009;Deaton & Stone, 2013;Ifcher et al, 2016;Kingdon & Knight, 2007). This literature suggests that the pattern emerges due to the relative magnitudes of mediators in the neighbors-income-SWB relationship; for example, public goods may dominate other mediators in small regions, while cost-of-living may dominate in large regions.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The literature on the relationship between neighbors' income and SWB has found that the sign of the relationship can depend on the scale of the region at which neighbors' income is considered. Numerous studies have found that the neighbors-income-SWB relationship is positive for small regions and negative for large regions (Brodeur & Fleche, 2016;Clark et al, 2009;Deaton & Stone, 2013;Graham & Felton, 2006;Ifcher et al, 2016;Kingdon & Knight, 2007).…”

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Income inequality and well-being in the U.S.: evidence of geographic-scale- and measure-dependence

2019

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Income Inequality and Well-Being in the U.S.: Evidence of Geographic-Scale-and Measure-Dependence U.S. income inequality has risen dramatically in recent decades. Researchers consistently find that greater income inequality measured at the state or national level is associated with diminished subjective well-being (SWB) in the U.S. We conduct the first multi-scale analysis (i.e., at the ZIP-code, MSA, and state levels) of the inequality-SWB relationship using SWB data from the U.S. Gallup Healthways Well-Being Index and income inequality data from the American Community Survey. We use the rich set of well-being measures afforded by the dataset (evaluative, positive-and negative-affective hedonic, and health measures) to examine the consistency of the relationship. We find that the relationship is both scaledependent and measure-dependent: income inequality is SWB-diminishing in large regions for all measures, SWB-diminishing in small regions for negative-affective hedonic measures, and SWB-improving in small regions for most other measures. Lastly, we find that taking all regions together, the net relationship between income inequality and SWB is negative.

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Section: Literature Reviewmentioning

confidence: 99%

People do not adapt. New analyses of the dynamic effects of own and reference income on life satisfaction

Kaiser

2018

Preprint

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Do people adapt to changes in income? In contradiction to much of the previous literature, I find no evidence of adaptation to income in GSOEP (1984-2015) and UKHLS (1996-2017) data. Furthermore, I find that people also do not adapt to changes in reference income. Instead, reference income effects may be subject to reinforcement over time. Following the empirical approach of Vendrik (2013), I obtain these findings by estimating life satisfaction equations in which contemporaneous and lagged terms for a respondent’s own household income and their estimated reference income are simultaneously entered. Additionally, I instrument for own income and include lags of a large set of controls. What was found to be adaptation to raw household income in previous studies turns out tohave been driven by reinforcement of an initially small negative effect of household size that grows large over time. Implications of this result for the estimation of equivalence scales with subjective data are discussed.

show abstract

Local neighbors as positives, regional neighbors as negatives: Competing channels in the relationship between others’ income, health, and happiness

Cited by 29 publications

References 47 publications

People do not adapt. New analyses of the dynamic effects of own and reference income on life satisfaction

People do not adapt. New analyses of the dynamic effects of own and reference income on life satisfaction

Income inequality and well-being in the U.S.: evidence of geographic-scale- and measure-dependence

People do not adapt. New analyses of the dynamic effects of own and reference income on life satisfaction

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