The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature
The paper provides a review of the empirical literature in economics that has attempted to test the relative income hypothesis as put forward by Duesemberry (1949) and the relative deprivation hypothesis as formalized by Runciman (1966). It is argu...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/09/18263952/relative-income-relative-deprivation-hypotheses-review-empirical-literature http://hdl.handle.net/10986/15825 |
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okr-10986-158252021-04-23T14:03:27Z The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature Verme, Paolo AVERAGE INCOMES CONSUMERS CONSUMPTION FUNCTION CROSS-COUNTRY STUDIES CROSS-SECTION DATA DATA SETS DECISION MAKING DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIMINISHING RETURNS DISTRIBUTIONAL CHANGE ECONOMETRIC ANALYSIS ECONOMETRIC ISSUES ECONOMETRIC MODEL ECONOMETRIC MODELS ECONOMETRIC PROBLEMS ECONOMETRICS ECONOMIC GROWTH ECONOMIC INEQUALITY ECONOMIC RESEARCH ECONOMIC REVIEW ECONOMIC SYSTEMS ECONOMIC THEORY ELASTICITY EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL MODEL EMPIRICAL MODELS EMPIRICAL RESEARCH EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL WORKS EMPLOYMENT STATUS EQUATIONS EXOGENOUS SHOCKS EXPLANATORY FACTORS EXPLANATORY POWER EXPLANATORY VARIABLE EXPLANATORY VARIABLES GDP GDP PER CAPITA GINI COEFFICIENT GINI INDEX GROUP INEQUALITIES HOUSEHOLD INCOME INCOME DISTRIBUTION INCOME EFFECT INCOME EQUATION INCOME INEQUALITY INCOME LEVELS INCOME SCALE INCOME SOURCE INCOME VARIABLES INCOMES INCREASING FUNCTION INDIVIDUAL INCOMES INEQUALITY KEYNESIAN ECONOMICS LABOR MARKET LABOR SUPPLY LABOUR LIFE EXPECTANCY LONGITUDINAL DATA LOTTERY LOW INCOME MACROECONOMICS MARGINAL UTILITY MARKET ECONOMIES MEAN INCOME MEAN INCOMES NATIONAL INCOME NEGATIVE SIGN PERMANENT INCOME PERMANENT INCOME HYPOTHESIS POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL SCIENCE POOR POSITIVE COEFFICIENT POVERTY REDUCTION PUBLIC ECONOMICS PUBLIC GOODS PUBLIC POLICY RELATIVE EARNINGS RELATIVE INCOME RELATIVE INCOME DISTRIBUTION RELATIVE INCOMES RURAL RURAL AREAS SAVINGS SIGNIFICANT DIFFERENCES SIGNIFICANT EFFECT SOCIAL CAPITAL TAXATION TRANSITION ECONOMIES UNEMPLOYED UNEMPLOYMENT UTILITY FUNCTION UTILITY FUNCTIONS UTILITY MAXIMIZATION WAGE INCREASES WAGES WAR WEALTH WELL-BEING WELLBEING The paper provides a review of the empirical literature in economics that has attempted to test the relative income hypothesis as put forward by Duesemberry (1949) and the relative deprivation hypothesis as formalized by Runciman (1966). It is argued that these two hypotheses and the empirical models used to test them are essentially similar and make use of the same relative income concept. The review covers the main intellectual contributions that led to the formulation and tests of these hypotheses, the main formulations of the utility and econometric equations used in empirical studies, the main econometric issues that complicate tests of the hypotheses, and the empirical results found in the literature. The majority of studies uses absolute and relative income together as explanatory factors in utility models and finds absolute income to have a positive and significant effect on utility (happiness). The majority of studies also finds relative income to be a significant factor in explaining utility but the sign of this relation varies across studies. The source of this variation is complex to detect given that few results are directly comparable across studies because of differences in model specifications. 2013-09-25T20:36:23Z 2013-09-25T20:36:23Z 2013-09 http://documents.worldbank.org/curated/en/2013/09/18263952/relative-income-relative-deprivation-hypotheses-review-empirical-literature http://hdl.handle.net/10986/15825 English en_US Policy Research Working Paper;No. 6606 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AVERAGE INCOMES CONSUMERS CONSUMPTION FUNCTION CROSS-COUNTRY STUDIES CROSS-SECTION DATA DATA SETS DECISION MAKING DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIMINISHING RETURNS DISTRIBUTIONAL CHANGE ECONOMETRIC ANALYSIS ECONOMETRIC ISSUES ECONOMETRIC MODEL ECONOMETRIC MODELS ECONOMETRIC PROBLEMS ECONOMETRICS ECONOMIC GROWTH ECONOMIC INEQUALITY ECONOMIC RESEARCH ECONOMIC REVIEW ECONOMIC SYSTEMS ECONOMIC THEORY ELASTICITY EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL MODEL EMPIRICAL MODELS EMPIRICAL RESEARCH EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL WORKS EMPLOYMENT STATUS EQUATIONS EXOGENOUS SHOCKS EXPLANATORY FACTORS EXPLANATORY POWER EXPLANATORY VARIABLE EXPLANATORY VARIABLES GDP GDP PER CAPITA GINI COEFFICIENT GINI INDEX GROUP INEQUALITIES HOUSEHOLD INCOME INCOME DISTRIBUTION INCOME EFFECT INCOME EQUATION INCOME INEQUALITY INCOME LEVELS INCOME SCALE INCOME SOURCE INCOME VARIABLES INCOMES INCREASING FUNCTION INDIVIDUAL INCOMES INEQUALITY KEYNESIAN ECONOMICS LABOR MARKET LABOR SUPPLY LABOUR LIFE EXPECTANCY LONGITUDINAL DATA LOTTERY LOW INCOME MACROECONOMICS MARGINAL UTILITY MARKET ECONOMIES MEAN INCOME MEAN INCOMES NATIONAL INCOME NEGATIVE SIGN PERMANENT INCOME PERMANENT INCOME HYPOTHESIS POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL SCIENCE POOR POSITIVE COEFFICIENT POVERTY REDUCTION PUBLIC ECONOMICS PUBLIC GOODS PUBLIC POLICY RELATIVE EARNINGS RELATIVE INCOME RELATIVE INCOME DISTRIBUTION RELATIVE INCOMES RURAL RURAL AREAS SAVINGS SIGNIFICANT DIFFERENCES SIGNIFICANT EFFECT SOCIAL CAPITAL TAXATION TRANSITION ECONOMIES UNEMPLOYED UNEMPLOYMENT UTILITY FUNCTION UTILITY FUNCTIONS UTILITY MAXIMIZATION WAGE INCREASES WAGES WAR WEALTH WELL-BEING WELLBEING |
| spellingShingle |
AVERAGE INCOMES CONSUMERS CONSUMPTION FUNCTION CROSS-COUNTRY STUDIES CROSS-SECTION DATA DATA SETS DECISION MAKING DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIMINISHING RETURNS DISTRIBUTIONAL CHANGE ECONOMETRIC ANALYSIS ECONOMETRIC ISSUES ECONOMETRIC MODEL ECONOMETRIC MODELS ECONOMETRIC PROBLEMS ECONOMETRICS ECONOMIC GROWTH ECONOMIC INEQUALITY ECONOMIC RESEARCH ECONOMIC REVIEW ECONOMIC SYSTEMS ECONOMIC THEORY ELASTICITY EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL MODEL EMPIRICAL MODELS EMPIRICAL RESEARCH EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL WORKS EMPLOYMENT STATUS EQUATIONS EXOGENOUS SHOCKS EXPLANATORY FACTORS EXPLANATORY POWER EXPLANATORY VARIABLE EXPLANATORY VARIABLES GDP GDP PER CAPITA GINI COEFFICIENT GINI INDEX GROUP INEQUALITIES HOUSEHOLD INCOME INCOME DISTRIBUTION INCOME EFFECT INCOME EQUATION INCOME INEQUALITY INCOME LEVELS INCOME SCALE INCOME SOURCE INCOME VARIABLES INCOMES INCREASING FUNCTION INDIVIDUAL INCOMES INEQUALITY KEYNESIAN ECONOMICS LABOR MARKET LABOR SUPPLY LABOUR LIFE EXPECTANCY LONGITUDINAL DATA LOTTERY LOW INCOME MACROECONOMICS MARGINAL UTILITY MARKET ECONOMIES MEAN INCOME MEAN INCOMES NATIONAL INCOME NEGATIVE SIGN PERMANENT INCOME PERMANENT INCOME HYPOTHESIS POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL SCIENCE POOR POSITIVE COEFFICIENT POVERTY REDUCTION PUBLIC ECONOMICS PUBLIC GOODS PUBLIC POLICY RELATIVE EARNINGS RELATIVE INCOME RELATIVE INCOME DISTRIBUTION RELATIVE INCOMES RURAL RURAL AREAS SAVINGS SIGNIFICANT DIFFERENCES SIGNIFICANT EFFECT SOCIAL CAPITAL TAXATION TRANSITION ECONOMIES UNEMPLOYED UNEMPLOYMENT UTILITY FUNCTION UTILITY FUNCTIONS UTILITY MAXIMIZATION WAGE INCREASES WAGES WAR WEALTH WELL-BEING WELLBEING Verme, Paolo The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature |
| relation |
Policy Research Working Paper;No. 6606 |
| description |
The paper provides a review of the
empirical literature in economics that has attempted to test
the relative income hypothesis as put forward by Duesemberry
(1949) and the relative deprivation hypothesis as formalized
by Runciman (1966). It is argued that these two hypotheses
and the empirical models used to test them are essentially
similar and make use of the same relative income concept.
The review covers the main intellectual contributions that
led to the formulation and tests of these hypotheses, the
main formulations of the utility and econometric equations
used in empirical studies, the main econometric issues that
complicate tests of the hypotheses, and the empirical
results found in the literature. The majority of studies
uses absolute and relative income together as explanatory
factors in utility models and finds absolute income to have
a positive and significant effect on utility (happiness).
The majority of studies also finds relative income to be a
significant factor in explaining utility but the sign of
this relation varies across studies. The source of this
variation is complex to detect given that few results are
directly comparable across studies because of differences in
model specifications. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Verme, Paolo |
| author_facet |
Verme, Paolo |
| author_sort |
Verme, Paolo |
| title |
The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature |
| title_short |
The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature |
| title_full |
The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature |
| title_fullStr |
The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature |
| title_full_unstemmed |
The Relative Income and Relative Deprivation Hypotheses : A Review of the Empirical Literature |
| title_sort |
relative income and relative deprivation hypotheses : a review of the empirical literature |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/09/18263952/relative-income-relative-deprivation-hypotheses-review-empirical-literature http://hdl.handle.net/10986/15825 |
| _version_ |
1764432086741024768 |