Social comparisons of income in one's community: Evidence from national surveys of income and happiness.

Abstract

Two studies provide evidence for social comparison effects of income on subjective well-being (SWB). The 1st study of 7,023 persons from nationally representative samples in the United States shows that the range and skew of the income distribution in a community affects a person's happiness, as predicted by range-frequency theory. The 2nd study of 8 nations over a period of 25 years shows that decreasing the skew (inequality) of the income distribution in a country increases average national SWB. Both studies strongly support social comparison effects of income within a community, and both results are predicted by range-frequency theory. These studies are the first to successfully extend earlier results of R. H. Smith, E. Diener, and D. H. Wedell (1989) from the laboratory into naturalistic situations. The magnitude of the social comparison effects is smaller than the main effect of income, which implies that nations can avoid creating a "hedonic treadmill."

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