The Relative Utility Hypothesis With and Without Self-reported Reference Wages

De la Garza, Adrian; Mastrobuoni, Giovanni; Sannabe, Atsushi; Yamada, Katsunori

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論文情報

タイトル	The Relative Utility Hypothesis With and Without Self-reported Reference Wages
著者	De la Garza, Adrian De la Garza, Adrian
	Mastrobuoni, Giovanni Mastrobuoni, Giovanni
	Sannabe, Atsushi Sannabe, Atsushi
	Yamada, Katsunori Yamada, Katsunori
キーワード等	Subjective well-being
	relative utility
	reference wages
内容	November 2010, Revised July 2012
内容	ISER discussion paper
抄録	This article makes three main contributions to the economics of happiness literature. First, using a novel data set of about 90,000 Japanese workers surveyed in annual cross-sections between 1990 and 2004, it demonstrates that individuals experience strong disutility when they perceive that their coworkers earn relatively higher wages. In contrast with other tests of the relative utility hypothesis in the literature, our estimation relies on workers’ self-reported beliefs of their peers’ wages, which we argue are more closely aligned to the “true” reference-group benchmark than the assumed comparison income measures employed in other studies. Second, the article shows important heterogeneous effects of both absolute and relative income on happiness. In particular, workers who are better able to accurately predict their peers’wages seem to experience both greater utility of higher own income and greater disutility of higher relative income. Third, we assess the validity of different methodologies that the literature has employed to construct comparison income measures and find significant discrepancies, particularly when reference income is derived from Mincer equations–a common approach in other studies. We demonstrate that such discrepancies stem from the difficulty in finding valid exclusion restrictions that help identify the relative income effect on happiness. In the absence of self-reported reference wages, we propose a simple IV strategy that does not eliminate the lack of consistency but delivers a lower bound of the “true” effect.
公開者	The Institute of Social and Economic Research, Osaka University
更新日付	2012-07
掲載誌名	Institute of Social and Economic Research Discussion Papers
巻	798
刊行年月	2012-07
URL	http://hdl.handle.net/11094/13626
関連情報 (references)	https://www.iser.osaka-u.ac.jp/library/dp/2010/DP0798R.pdf
言語	英語
カテゴリ	ディスカッション／ワーキング・ペーパー DP/WP

著者版フラグ	none
NII資源タイプ	テクニカルレポート
ローカル資源タイプ	ディスカッション／ワーキング・ペーパー
dcmi資源タイプ	text
DCTERMS.bibliographicCitation	Institute of Social and Economic Research Discussion Papers.798
DC.title	The Relative Utility Hypothesis With and Without Self-reported Reference Wages
DC.creator	De la Garza, Adrian
	Mastrobuoni, Giovanni
	Sannabe, Atsushi
	Yamada, Katsunori
DC.publisher	The Institute of Social and Economic Research, Osaka University
DC.language" scheme="DCTERMS.RFC1766	英語
DCTERMS.issued" scheme="DCTERMS.W3CDTF	2012-07
DC.identifier" scheme="DCTERMS.URI	http://hdl.handle.net/11094/13626
DC.subject	Subjective well-being
	relative utility
	reference wages
DC.description	November 2010, Revised July 2012
DC.description	ISER discussion paper
DCTERMS.abstract	This article makes three main contributions to the economics of happiness literature. First, using a novel data set of about 90,000 Japanese workers surveyed in annual cross-sections between 1990 and 2004, it demonstrates that individuals experience strong disutility when they perceive that their coworkers earn relatively higher wages. In contrast with other tests of the relative utility hypothesis in the literature, our estimation relies on workers’ self-reported beliefs of their peers’ wages, which we argue are more closely aligned to the “true” reference-group benchmark than the assumed comparison income measures employed in other studies. Second, the article shows important heterogeneous effects of both absolute and relative income on happiness. In particular, workers who are better able to accurately predict their peers’wages seem to experience both greater utility of higher own income and greater disutility of higher relative income. Third, we assess the validity of different methodologies that the literature has employed to construct comparison income measures and find significant discrepancies, particularly when reference income is derived from Mincer equations–a common approach in other studies. We demonstrate that such discrepancies stem from the difficulty in finding valid exclusion restrictions that help identify the relative income effect on happiness. In the absence of self-reported reference wages, we propose a simple IV strategy that does not eliminate the lack of consistency but delivers a lower bound of the “true” effect.
citation_title	The Relative Utility Hypothesis With and Without Self-reported Reference Wages
citation_author	De la Garza, Adrian
	Mastrobuoni, Giovanni
	Sannabe, Atsushi
	Yamada, Katsunori
citation_publisher	The Institute of Social and Economic Research, Osaka University
citation_language	英語
citation_date	2012-07
citation_journal_title	Institute of Social and Economic Research Discussion Papers
citation_volume	798
citation_public_url	http://hdl.handle.net/11094/13626
citation_keywords	Subjective well-being
	relative utility
	reference wages

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