Relative Deprivation, Reference Groups and the Assessment of Standard of Living

Economic Systems (Impact Factor: 0.61). 03/2012; 36(1). DOI: 10.1016/j.ecosys.2011.04.006

ABSTRACT This paper proposes two new indices of relative deprivation, derived from an extension of the concept of the generalized Gini for the measurement of distributional change. Population- and income-weighted relative deprivation indices are then defined and, using panel data from the Consortium of Household Panels for European Socio-Economic Research, this paper checks which of the various ways of defining individual deprivation best fits the answers given by individuals on the degree of their satisfaction with income. The analysis finds that the deprivation indices proposed are consistently and negatively correlated with income satisfaction as reported by respondents, that income weighted measures fit better than population weighted measures, and that this fit improves with countries that experienced deep institutional changes such as the transitional economies of Eastern Europe.

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Available from: Jacques Silber, Aug 17, 2015
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    • "Economics has approached the question of relative deprivation and reference groups in more recent times with the introduction of the first quantitative measure of relative deprivation developed by Yitzhaki in 1979, and today there are a range of measures of relative deprivation that can be readily used for analyses (Hey and Lambert, 1980, Bossert and D'Ambrosio, 2006, Chakravarty et al. 2005, Chakravarty, 2007). In particular, recent research has shown how quantitative measures of relative deprivation can be adapted to incorporate self-selection mechanisms of the reference groups (Verme and Izem, 2008, Silber and Verme, 2011), an issue particularly relevant if we want to better understand how feelings of deprivation can be generated among marginalized groups in society. "
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