1 DOES ENVY DESTROY SOCIAL FUNDAMENTALS? THE IMPACT OF RELATIVE INCOME POSITION ON SOCIAL CAPITAL ∗ Justina A.V. Fischer and Benno Torgler Abstract: Research evidence on the impact of relative income position on individual attitudes and behaviour is sorely lacking. Therefore, this paper assesses such positional impact on social capital by applying 14 different measurements to International Social Survey Programme data from 25 countries. We find support for a positional concern effect or ‘envy’ whose magnitude in several cases is quite substantial. The results indicate that such an effect is non-linear. In addition, we find an indication that absolute income level is also relevant. Lastly, changing the reference group (regional versus national) produces no significant differences in the results. JEL Classification: Z130, H260, I310, D000, D600 Keywords: Relative income position; envy; positional concerns; social capital; social norms; happiness ∗ Justina A. V. Fischer, STICERD, London School of Economics, Houghton Street London WC2A 2AE, UK and Swiss Institute for International Economics and Applied Economic Research (SIAW), University of St. Gallen, Bodanstrasse 8, 9000 St. Gallen, Switzerland, e-mails:
[email protected],
[email protected]; Benno Torgler, Yale Center for International and Area Studies, Leitner Program in International & Comparative Political Economy, 34 Hillhouse Avenue, P.O. Box 208206, New Haven, CT 06520 (USA), e-mail:
[email protected]. He is also associated with CREMA – Center for Research in Economics, Management and the Arts, Switzerland. Both authors gratefully acknowledge financial support from the Swiss National Science Foundation (SNF). We wish to thank Julia Angelica for professional editing. 2 Envy ..