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The Role of Proximity in Social Income Dynamic Comparisons and Well-Being

Author

Listed:
  • Raquel Fonseca
  • Ana I. Moro-Egido

Abstract

The present study investigates the role of proximity in shaping social income static and dynamic comparisons and their impact on well-being, measured in terms of self-assessed health. Using the Spanish Survey of Household Finances (2002-2017), the study examines how individuals compare their income trajectories with those of their peers, considering varying degrees of proximity. The findings reveal that well-being is negatively impacted by static comparisons only in the case of a significant income gap with richer individuals. However, when dynamic comparisons are introduced, individuals experience an improvement in their subjective well-being when comparing to individuals who previously earned more but now earn less, as long as they drop at a certain distance. Consequently, no effect is observed when comparing with individuals in closer proximity, and effects emerge when the degree of proximity is low.

Suggested Citation

  • Raquel Fonseca & Ana I. Moro-Egido, 2025. "The Role of Proximity in Social Income Dynamic Comparisons and Well-Being," Cahiers de recherche / Working Papers 2502, Chaire de recherche sur les enjeux économiques intergénérationnels / Research Chair in Intergenerational Economics.
    • Handle: RePEc:rsi:creeic:2502
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    More about this item

    Keywords

    static and dynamic relative hypotheses; income; proximity; well-being.;
    All these keywords.

    JEL classification:

    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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