This paper empirically assesses the theory of interpersonal income comparison using a unique data set on suicide deaths in the United States. We treat suicide as a choice variable, conditional on exogenous risk factors, reflecting one’s assessment of current and expected future utility. Using this framework we examine whether differences in group-specific suicide rates are systematically related to income dispersion, controlling for socio-demographic characteristics and income level. The results strongly support the notion that individuals consider relative income in addition to absolute income when evaluating their own utility. Importantly, the findings suggest that relative income affects utility in a two-sided manner, meaning that individuals care about the incomes of those above them (the Joneses) and those below them (the Smiths). Our results complement and extend those from studies using subjective survey data or data from controlled experiments.
Wilson, Daniel J., and Mary C. Daly. 2006. “Keeping Up with the Joneses and Staying Ahead of the Smiths: Evidence from Suicide Data,” Federal Reserve Bank of San Francisco Working Paper 2006-12. Available at https://doi.org/10.24148/wp2006-12