Learning about one's relative position and subjective well-being

Abstract

In this article we show evidence which suggests that changes in an individual's relative position affects his subjective well-being (SWB). In this sense, our findings are in line with those who argue that a felicity function should take into account both absolute and relative position. Our results are based on a simple experimental design to discuss whether learning about one's relative position affects SWB. Additionally, using nonexperimental data we find a significant association between SWB and relative wage.

Acknowledgements

Thanks to Jaime Alonso-Carrera, Begoña Alvarez, Gema Alvarez, Pedro Bouso, Eduardo Gimenez and Eva Rodriguez for discussions and helping in the experiment. Financial support from the Fundación Ramón Areces and Spanish Dirección General de Enseñanza Superior SEJ2004/04583ECON is acknowledged.

Notes

¹ A similar experiment was conducted in Uruguay obtaining the same conclusions. Due to space reasons, we only include one of the experiments.