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Who Compares to Whom? The Anatomy of Income Comparisons in Europe*


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     The Norwegian Social Science Data Services (NSD) is the data archive and distributor of the ESS data. We are very grateful to seminar participants at the Royal Economic Society Conference (Warwick, 2009) and the Relativity, Inequality and Public Policy conference (Edinburgh, 2009) and three anonymous referees for very helpful comments. We thank CEPREMAP for financial support.


This article provides unprecedented direct evidence from large-scale survey data on both the intensity (how much?) and direction (to whom?) of income comparisons. Income comparisons are considered to be at least somewhat important by three-quarters of Europeans. They are associated with both lower levels of subjective well-being and a greater demand for income redistribution. The rich compare less and are happier than average when they do, which latter is consistent with relative income theory. With respect to the direction of comparisons, colleagues are the most frequently-cited reference group. Those who compare to colleagues are happier than those who compare to other benchmarks.