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Income Status and Life Satisfaction

FitzRoy, Felix R.; Nolan, Michael A.


Felix R. FitzRoy

Dr Michael Nolan
Senior Lecturer in Economics and HUBS Undergraduate Admissions Tutor


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.


FitzRoy, F. R., & Nolan, M. A. (2021). Income Status and Life Satisfaction. Journal of Happiness Studies, 23, 233–256.

Journal Article Type Article
Acceptance Date Apr 12, 2021
Online Publication Date May 11, 2021
Publication Date 2021
Deposit Date Feb 4, 2022
Publicly Available Date Feb 4, 2022
Journal Journal of Happiness Studies
Print ISSN 1389-4978
Electronic ISSN 1573-7780
Publisher Springer
Peer Reviewed Peer Reviewed
Volume 23
Pages 233–256
Keywords Life satisfaction ; Income rank; Relative income
Public URL


Published article (631 Kb)

Copyright Statement
© The Author(s) 2021.
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