Objective Relative Income Impacts Life Satisfaction and Positive Affect Only When Subjective Absolute Income is High.

Abstract

Given the crucial role of money in individuals' daily life and the potential societal impact of income inequality, it is not surprising that the income-subjective well-being (SWB) link has been a topic of great research interest. The present study extends past research by examining the independent and interactive effects of three personal income factors. An experiment was conducted where subjective income (both absolute and relative) were manipulated and objective relative income was measured. Subjective relative income impacted perceived deprivation, negative affect, and state hostility, whereas the other two income factors showed a main effect on perceived deprivation only. Regarding interaction effects, objective relative income impacted life satisfaction and positive affect only for individuals in the high (vs. low) subjective absolute income condition, i.e., those who perceived their income as adequate for needs/wants. We proposed that the relative deprivation theory (Smith et al., 2012), which primarily focuses on the impact of low relative income (or income inequality), should be expanded to account for both perceived deprivation "relative to others" and perceived deprivation "relative to one's own needs/wants."