The role of proximity in social income dynamic comparisons and well-being

The present study investigates the role of proximity in shaping social income staticand dynamic comparisons and their impact on well-being, measured in terms ofself-assessed health. Using the Spanish Survey of Household Finances (2002-2017),the study examines how individuals compare their income trajectories with thoseof their peers, considering varying degrees of proximity. The findings reveal thatwell-being is negatively impacted by static comparisons only in the case of a significantincome gap with richer individuals. However, when dynamic comparisons areintroduced, individuals experience an improvement in their subjective well-beingwhen comparing to individuals who previously earned more but now earn less, aslong as they drop at a certain distance. Consequently, no effect is observed whencomparing with individuals in closer proximity, and effects emerge when the degreeof proximity is low.