Compared to Whom?: Inequality, Social Comparison, and Happiness in the United States

We contribute to the literature on positional goods and subjective well-being by providing new evidence on the following questions: Is the effect of income on subjective well-being mainly relative or absolute? Does the intensity of social comparison condition the effect of income on well-being? Does the reference group for comparison condition this effect? We present results from the Social Status, Consumption, and Happiness Survey, a national survey of Americans conducted in 2012. The findings suggest that the more highly individuals rate their income relative to others, the happier they are; that individuals who find it important to compare their income to that of others are less happy; and that the reference group that is salient for comparison conditions the association between income and well-being. We situate these findings in the literatures on the dynamics of inequality, social comparison, and well-being.