Income status and life satisfaction

Felix R. FitzRoy, Michael A. Nolan

    Research output: Contribution to journalArticlepeer-review


    The importance of both income rank and relative income, as indicators of status, has long been recognised in the literature on life satisfaction and happiness. Recently, several authors have made explicit comparisons of the relative importance of these two measures of income status, and concluded that rank dominates to the extent that reference income becomes insignificant in regressions including both these explanatory variables, and that even absolute or household income, otherwise always positively related to happiness, may lose statistical significance. Here we test this hypothesis with a large UK panel (British Household Panel Survey and Understanding Society) for 1996–2017, split by age and retirement status, and find, contrary to previous results, that rank, household income and reference income are all usually important explanatory variables, but with significant differences between subgroups. This finding holds when rank is in its often-used relative form, and also with absolute rank.
    Original languageEnglish
    Number of pages24
    JournalJournal of Happiness Studies
    VolumeFirst Online
    Early online date11 May 2021
    Publication statusE-pub ahead of print - 11 May 2021


    • Life satisfaction
    • Income rank
    • Relative income


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