On Relative Income and Life Satisfaction: The Moderating Role of GDP Per Capita, Culture and Income Inequality

Life satisfaction is a key component of people’s subjective well-being. This study assessed the relationship between relative income and life satisfaction among Chinese adults, using data from a cross-sectional survey. Individual-level data (N = 1369) came from the 2016 China Genuine Progress indicator Survey (CGPiS) conducted in Beijing and Chengdu, China. Ordered logistic regressions were performed to examine the relationship between relative income and life satisfaction among CGPiS adult respondents. Respondents’ life satisfaction was positively associated with relative income in comparison to their relatives and friends but not associated with relative income in comparison to their residing community and city. Subgroup analyses replicated the findings among male respondents and respondents with good or excellent self-rated health. In contrast, female respondents’ life satisfaction was positively associated with relative income in comparison to their city of residence, but not associated with relative income in comparison to their relatives, friends, and residing community. Life satisfaction among those with poor or fair self-rated health was not associated with any of the four dimensions of relative income. Relative income in comparison to relatives and friends was positively associated with life satisfaction in Chinese adults. Future studies adopting a longitudinal or experimental design are warranted to replicate the findings.

The Measurement of Intergroup Income Inequality: A Conceptual Review

Objective To explore the relationship among absolute income, big five personality and life satisfaction, and the mediating effect of relative income. Methods 5927 citizens from different cities were assessed by NEO five-factor inventory(NEO-FFI)and satisfaction with life scale(SWLS). Results (1)The mean score of life satisfaction was 19.61±5.99.Female scored higher than male, and there were statistically significant differences between them(19.98±5.92 vs 19.14±5.95, t=-5.08, P<0.01). (2)The absolute income, extraversion and conscientiousness had a significant main effect on life satisfaction(β=0.13~0.19, P<0.01), neuroticism, openness and agreeableness had a significant main negative effect on life satisfaction(β=-0.04--0.15, P<0.01). (3)The relative income had a significant main effect on life satisfaction(β=0.35, P<0.01). (4)Relative income had a mediating effect on the relation between absolute income, neuroticism, extraversion, agreeableness, conscientiousness and life satisfaction(P<0.01). Conclusion Relative income has a mediating effect on the relation between absolute income, personality and life satisfaction. Key words: Life satisfaction; Big five personality; Absolute income; Relative income

Analyzing the relationship between income and life satisfaction of Forest farm households - a behavioral economics approach

With a focus on the immigrant population, this study examines how the association between a relative income position and life satisfaction varies when the comparison group changes. Drawing data from Understanding Society in the UK between 2009 and 2015, this study first shows that after migration, income comparisons with the mainstream and co-ethnic groups in the host country matter more than that with the source-country population for one’s life satisfaction. Furthermore, the relevance of comparison groups to life satisfaction varies across immigrant generations. Income comparison with the source-country population is more relevant to life satisfaction of the 1st generation, whereas 1.5 and 2nd generations consider income comparisons within the host country more relevant. In particular, favourable income comparison with the mainstream group in the host country is the most relevant to life satisfaction of the 2nd-generation, followed by the 1.5-generation, and last by the 1st-generation immigrants.

The associations between absolute vs. relative income at the household or neighborhood level and cardiovascular disease (CVD) risk remain understudied in the Chinese context. Further, it is unclear whether stress biomarkers, such as cortisol, are on the pathway from income to CVD risk. We examined the associations of absolute and relative income with CVD risk observationally, as well as the mediating role of cortisol, and validated the role of cortisol using Mendelian Randomization (MR) in Hong Kong Chinese. Within Hong Kong's FAMILY Cohort, associations of absolute and relative income at both the individual and neighborhood levels with CVD risk [body mass index (BMI), body fat percentage, systolic blood pressure, diastolic blood pressure, self-reported CVD and self-reported diabetes] were examined using multilevel logistic or linear models (n = 17,607), the mediating role of cortisol using the mediation analysis (n = 1,562), and associations of genetically predicted cortisol with CVD risk using the multiplicative generalized method of moments (MGMMs) or two-stage least squares regression (n = 1,562). In our cross-sectional observational analysis, relative household income deprivation (per 1 SD, equivalent to USD 128 difference in Yitzhaki index) was associated with higher systolic blood pressure (0.47 mmHg, 95% CI 0.30–0.64), but lower BMI (−0.07 kg/m2, 95% CI −0.11 to −0.04), independent of absolute income. Neighborhood income inequality was generally unrelated to CVD and its risk factors, nor was absolute income at the household or neighborhood level. Cortisol did not clearly mediate the association of relative household income deprivation with systolic blood pressure. Using MR, cortisol was unrelated to CVD risk. Based on our findings, relative household income deprivation was not consistently associated with cardiovascular health in Hong Kong Chinese, nor were neighborhood income inequality and absolute income, highlighting the context-specific ways in which relative and absolute income are linked to CVD risk.

How do income and income inequality combine to influence subjective well-being? We examined the relation between income and life satisfaction in different societies, and found large effects of income inequality within a society on the relationship between individuals’ incomes and their life satisfaction. The income–satisfaction gradient is steeper in countries with more equal income distributions, such that the positive effect of a 10% increase in income on life satisfaction is more than twice as large in a country with low income inequality as it is in a country with high income inequality. These findings are predicted by an income rank hypothesis according to which life satisfaction is derived from social rank. A fixed increment in income confers a greater increment in social position in a more equal society. Income inequality may influence people’s preferences, such that in unequal countries people’s life satisfaction is determined more strongly by their income.

The purpose of this paper is to demonstrate the impact of income inequality on various indexes of mental health and on happiness in wealthy nations. Initially, the unequal distribution of income is documented in wealthy nations, especially in the United States of America. After the World War II, income equality was at a level never reached before, but since the eighties, income inequality has raised dramatically in many industrialized countries. The 2008 crisis has worsened the situation in many of them, particularly in the United States. Furthermore, prejudices have increased against women, Blacks, Spanish-speakers and those who receive social welfare. A selective review of the literature is made in order to document the impact of income inequality on a few indicators of mental health (from WHO, UN, UNICEF, OCDE and World Bank) and on happiness, defined here as life satisfaction. Income inequality is positively related to the following indexes: Index of Mental Illness from the WHO (0.73), Index of the United Nations' Office on Drug Consumption (0.63) and a composite Index of ten psychosocial problems, constituted by Wilkinson and Pickett, 2013 (0.87). On the other hand, income inequality is negatively associated to the UNICEF Index of Child Well-Being (-0.71). Furthermore, the level of anxiety and of depression is higher in countries where income inequality is greater. The correlation between happiness and income inequality in the 23 wealthy nations is -0.48; this correlation becomes -0.41 after control of the effect of the GNP (Gross National Product). These results support the idea that it is relative income - not absolute income - which matters in the evaluation of our life and of our happiness. In underdeveloped nations, any increase in GNP promotes the well-being of the citizens; whereas in wealthy nations, it is the equality of the distribution that is more important. Many arguments supporting the causal relation from income inequality to psychosocial problems and unhappiness are presented. In reality, this income inequality is like a "virus" which affects the well-being of the entire population. Even if the increase of mental problems may be explained by many factors - historical, cultural, ethnic, social, and societal - these factors do not eliminate the effect of income inequality. In order to counter the effects of income inequality and to promote a "flourishing" mental health, the professionals of human sciences are invited to take into account this reality in the implementation of their interventions and to participate to the elaboration of social politics as well as in the education process of the general population.

This paper aims at establishing a clear link between different types of inequality and life satisfaction in Europe. Indices of income inequality and of inequality of opportunity are proposed to identify the relationship with life satisfaction using six waves of the European Social Survey (ESS). In addition, reference groups based on similarly old and educated individuals are created to account for differences in relative income. Results show that income inequality, high levels of inequality of opportunity and negative relative socioeconomic status reduce people's life satisfaction in Europe. Moreover, variations in inequality of opportunity explain more than variations in income inequality. Our main results suggest that all socioeconomic groups are dissatisfied with income inequality, whereas primarily low socioeconomic groups worry about inequality of opportunity. We interpret our results advancing the hypothesis that high socioeconomic groups might fear to lose their advantaged position. This fear will then increase with income inequality. In contrast, limited social mobility reduces the satisfaction of disadvantaged groups, whereas it generates a lower risk of falling down for those with good circumstances and consequently no effects on their subjective well-being.

How the income of others affects the life satisfaction of materialists

Whether relative income or absolute income could affect subjective well-being has been a bone of contention for years. Life satisfaction and the relative frequency of positive and negative emotions are parts of subjective well-being. According to the prospect theory, hedonic adaptation helps to explain why positive emotion is often so hard to be maintained, and negative emotion wouldn’t be easy to be eliminated. So we expect the relationship between income and positive emotion is different from that between income and negative emotion. Given that regional reference is the main comparison mechanism, effects of regional average income on regional average subjective well-being should be potentially zero if only relative income matters. Using multilevel analysis, we tested the hypotheses with a dataset of 30,144 individuals from 162 counties in China. The results suggested that household income at the individual level is associated with life satisfaction, happiness and negative emotions. On the contrary, at a county level, household income is only associated with negative emotion. In other words, happiness and life satisfaction was only associated with relative income, but negative emotion was associated with relative income and absolute income. Without social comparison, income doesn’t improve happiness, but it could weaken negative emotion. Therefore, it is possible for economic growth to weaken negative emotion without improving happiness. These findings also contribute to the current debate about the “Esterling paradox.”

This paper presents an in-depth study and analysis of the correlation between satisfaction with rural residents' income and mental health well-being in the context of industrial structure upgrading. Most of the studies on residents' subjective well-being from the perspective of relative income or income inequality have started from the happiness of rural residents and the satisfaction of rural residents' life, and few scholars have focused on the psychological health of rural residents. Subjective well-being is significantly related to external and internal goals in desire. Life satisfaction is significantly and positively correlated with external and internal goals, as well as the six dimensions of desire, except for social identity; positive emotions are significantly and positively correlated with internal goals; negative emotions are only negatively correlated with self-acceptance, and there is a significant positive correlation between income level and desire. In vertical income, there is also a process of judging whether the expected income is achieved. If the expected income growth level is achieved, the income satisfaction will increase. Desire mediates the effect of income level on subjective well-being. Income level influences subjective well-being through internal goals; income level influences life satisfaction and positive emotions through external goals. The relationship between income inequality and mental health is influenced by the characteristics of the population, with women and middle-aged people being the most negatively affected. This relationship is also influenced by income level, with the effect of income inequality on mental health showing a negative effect in the lower and middle-income groups but a positive effect in the higher income groups. Income inequality affects residents' mental health through the mediating effects of a sense of social justice, life stress, and trust in government. Inequality in household wealth can exacerbate the negative effects of income inequality on mental health.

I analyse three aspects of the relationship between subjective well-being and the social environment. The first of them is the role of the reference groups. My re-sults based on Hungarian surveys from 1993 and 2005 show that beside absolute income interpersonal and intrapersonal comparison influence individuals’ satisfac-tion as well. The effect of reference group’s income depends on the characteristics of the reference group: when comparing ourselves with others of the same social status the signal effect is more dominant than the status effect, while when the social dis-tance grows the signal effect gets less significant. Contrary to my expectation effect of reference income did not change between the two time points, i.e. the size of the signal effect did not decrease. The most likely explanation of the result is that income of relevant others provided less information as social environment and future became less volatile and more predictable, but it was compensated by more positive evalua-tion of the future, and increasing confidence about “catching up with the Jonses”. In the next section I examine the effect of culture on life satisfaction using in-ternational migration as a natural experiment. I show that, ceteris paribus, in any giv-en residence country immigrants who come from countries with high levels of life satisfaction tend to be more satisfied than immigrants who migrate from countries with low levels of life satisfaction. Since immigrants differ only in their cultural backgrounds, the result can be interpreted as evidence for the causal effect of culture values, beliefs, attitudes and norms transmitted between generations) on individual subjective well-being. In the last section I analysed the relationship between intra-couple income distribution and subjective well-being. I show that the association between the wom-an’s relative income (the woman’s share of the couple’s total earnings) and life satis-faction is negative not only among men, but among women. The result can be ex-plained as the impact of traditional gender roles: among those who prefer equal gen-der roles the woman’s relative income has no effect on life satisfaction, whereas among those who prefer traditional gender roles the negative association is stronger.

Three very large, nationally representative samples of married couples were used to examine the relative importance of 3 types of personality effects on relationship and life satisfaction: actor effects, partner effects, and similarity effects. Using data sets from Australia (N = 5,278), the United Kingdom (N = 6,554), and Germany (N = 11,418) provided an opportunity to test whether effects replicated across samples. Actor effects accounted for approximately 6% of the variance in relationship satisfaction and between 10% and 15% of the variance in life satisfaction. Partner effects (which were largest for Agreeableness, Conscientiousness, and Emotional Stability) accounted for between 1% and 3% of the variance in relationship satisfaction and between 1% and 2% of the variance in life satisfaction. Couple similarity consistently explained less than .5% of the variance in life and relationship satisfaction after controlling for actor and partner effects.

Many studies have examined the roles of absolute income and relative income in subjective well‐being. However, previous studies focused mainly on individual‐level indicators and neglected the interdependent effects of each spouse’s income in the family context. In this study, we focused on the relationships among absolute income (real income), relative income (subjective evaluation of the family economic status), and life satisfaction. We applied the actor–partner interdependence mediation model, and our results, which we derived from 1,744 Chinese dyadic samples, indicated that absolute and relative income were crucial indicators of subjective well‐being. Interdependencies existed between husbands and wives, but the effects were asymmetrical. Specifically, wives cared more about their husbands’ absolute income, whereas husbands cared more about their wives’ subjective evaluation of the family’s economic status. In addition, the relationship between absolute income and life satisfaction was mediated by the wife’s evaluation of the family’s economic status. The theoretical and practical implications are discussed.