Positional Income Concerns: Prevalence and Relationship with Personality and Economic Preferences

29 Pages Posted: 18 Dec 2014

See all articles by Tim Friehe

Tim Friehe

University of Konstanz - Department of Economics

Mario Mechtel

Leuphana University of Lueneburg

Markus Pannenberg

University of Applied Sciences Bielefeld - Department of Business and Economics; DIW Berlin - GSOEP; Institute for the Study of Labor (IZA), Bonn

Date Written: November 2014

Abstract

This paper presents detailed evidence about who compares to whom in terms of relative income. We rely on representative survey data on the importance of income comparisons vis-a-vis seven reference groups, allowing us to exploit within-subject heterogeneity. We explore the prevalence and determinants of positional income concerns, investigating the role of personality and economic preferences. Our results establish robust relationships between positional income concerns and the personality traits agreeableness, conscientiousness, and neuroticism, some of which depend on the reference group. Furthermore, risk and fairness preferences are significantly correlated with positional income concerns.

Keywords: relative income, status, personality, Big Five, survey, SOEP, economic preferences, risk, fairness

JEL Classification: D03, D12, D63

Suggested Citation

Friehe, Tim and Mechtel, Mario and Pannenberg, Markus, Positional Income Concerns: Prevalence and Relationship with Personality and Economic Preferences (November 2014). SOEPpaper No. 712, Available at SSRN: https://ssrn.com/abstract=2539049 or http://dx.doi.org/10.2139/ssrn.2539049

Tim Friehe (Contact Author)

University of Konstanz - Department of Economics ( email )

Konstanz, D-78457
Germany

Mario Mechtel

Leuphana University of Lueneburg ( email )

Scharnhorststraße 1
Wilschenbrucher Weg 69
Lüneburg, 21335
Germany
+4941316772636 (Phone)

HOME PAGE: http://www.mario-mechtel.de

Markus Pannenberg

University of Applied Sciences Bielefeld - Department of Business and Economics ( email )

Universitätsstrasse 25
Bielefeld, D-33615
Germany
+49 521 106-5076 (Phone)
+49 521 106-5086 (Fax)

HOME PAGE: http://aix5.fh-bielefeld.de/~mpannenb/index.html

DIW Berlin - GSOEP ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Institute for the Study of Labor (IZA), Bonn

P.O. Box 7240
Bonn, D-53072
Germany

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