The role of proximity and social comparisons on Subjective well-being

Resumen

Using longitudinal data from the German Socio-Economic Panel, we analyze the importance of modeling social comparisons when trying to determine their effect on subjective well-being. The contribution of the paper is twofold. On the one hand, we consider measures of social comparisons which assume that individuals compare themselves to each and all the other individuals along the income distribution and that individuals have a different sensitivity for those different comparisons. On the other hand, we consider the possibility that the type of social contacts and values or norms that individuals exhibit could influence the effect of social comparisons on subjective well-being. Interestingly, our results confirm that individuals� subjective well-being is affected not only by the comparisons the individual makes with others above themselves in the income distribution, but also by comparisons made with individuals below themselves. Moreover, it is relevant to consider the sensitivity of social comparisons to the proximity of incomes when evaluating the effect of social comparisons on subjective well-being. Additionally, we conclude that both social and cultural capital also shape the effect of social comparisons on subjective well-being and that the effect is different depending on whether or not comparisons with other individuals are sensitive to proximity.