Economic choices and status: measuring preferences for income rank

Mujcic, Redzo and Frijters, Paul (2013) Economic choices and status: measuring preferences for income rank. Oxford Economic Papers, 65 1: 47-73. doi:10.1093/oep/gpr065


Author Mujcic, Redzo
Frijters, Paul
Title Economic choices and status: measuring preferences for income rank
Journal name Oxford Economic Papers   Check publisher's open access policy
ISSN 0030-7653
1464-3812
Publication date 2013-01
Year available 2012
Sub-type Article (original research)
DOI 10.1093/oep/gpr065
Volume 65
Issue 1
Start page 47
End page 73
Total pages 27
Place of publication Oxford, United Kingdom
Publisher Oxford University Press
Collection year 2014
Language eng
Formatted abstract
We report on the trade-offs that 1,068 Australian university students make between absolute income and the rank of that income in hypothetical income distributions. We find that income rank matters independently of absolute income, with greater weight given to rank by males, migrants, and individuals from wealthy families. Rank-sensitive individuals require as much as a 200% increase in income to be compensated for going from the top to the bottom of the income distribution. Migrants residing abroad for longer periods of time, and with more affluent job titles, are more likely to compare themselves to others at the destination. A dynamic choice model of compensating incomes predicts the average respondent to need a permanent increase in income of up to $10,000 (70%) when moving from a society with a mean income of $14,000 (e.g., Mexico) to a society with a mean income of $46,000 (e.g., the USA).
Keyword Relative Income
Interdependent Preferences
Positional Concerns
Income Distribution
Economic analysis
University sector
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Article Number gps065 First published online: January 18, 2012

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
School of Economics Publications
 
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