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Citation Information

Type Journal Article - The Journal of Economic Inequality
Title How important is rank to individual perception of economic standing? A within-community analysis
Author(s)
Volume 7
Issue 3
Publication (Day/Month/Year) 2009
Page numbers 225-248
URL http://link.springer.com/article/10.1007/s10888-008-9076-1
Abstract
Using the Indonesia Family Life Survey data, this paper is the first of its kind to explore empirically whether rank-position within one’s community matters to individual perception of where he or she stands on the self-defined economic ladder. By applying a multi-level modeling equation approach on responses to the subjective economic ladder (SEL) question, I find that it is not the mean income or expenditure of a reference group that affects SEL but rather the individual’s ordinal ranking within a reference group (for example, the individual is from the 5th or 40th richest household in the community). Consistent with Hirsch (Hirsch, F.: Social limitation to growth. Harvard University Press, Cambridge (1976)), SEL depends significantly more on the rank-position of the positional goods and less on the nonpositional goods owned by the individual.

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