Hirschman's Tunnel Effect Goes Abroad: International Dimensions of Social Comparison and Subjective Well-Being

41 Pages Posted: 1 Mar 2018

See all articles by Aart Gerritsen

Aart Gerritsen

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Harald Lang

Max Planck Institute for Tax Law and Public Finance

Date Written: June 2016

Abstract

We find evidence that individuals' subjective well-being depends on the macroeconomic performance of other countries as well as that of their home country. Given the home country's economic growth, an individual's life satisfaction is positively associated with the economic growth of important trade partners. It is negatively associated with the economic growth of neighboring countries that engage in relatively little trade with the home country. Our findings are consistent with individuals who care about their economic situation relative to that of people in other countries, but who at the same time anticipate positive spillovers from the economic performance of countries that share an important economic tie with their home country.

Keywords: Subjective well-being, social comparison, tunnel effect, economic growth

JEL Classification: I31, D62

Suggested Citation

Gerritsen, Aart and Lang, Harald, Hirschman's Tunnel Effect Goes Abroad: International Dimensions of Social Comparison and Subjective Well-Being (June 2016). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2018-2, Available at SSRN: https://ssrn.com/abstract=3131660 or http://dx.doi.org/10.2139/ssrn.3131660

Aart Gerritsen (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Harald Lang

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

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