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I remember reading about a study. I forgot the actual details of it, but the gist of it was: people were asked in what situation they would prefer to live, one where they make \$100,000 dollars and the neighbours all make \$200,000 dollars, or one where they make \$10,000 dollars and the neighbours all make \$5000 dollars. Most participants chose the \$10,000 vs \$5,000 situation, even though they would have ended up with much less money (note: I am pretty sure I got the actual numbers wrong).

Sadly, I don't remember where I read it (thought it must have been in Predictably Irrational, but can't find it there).

Questions

  • What is the reference for the study
  • What theories explain this behavior?
  • Where can I read background information on the topic?
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I've found Neighbors as Negatives: Relative Earnings and Well-Being by E.F.P. Luttmer (2005), although I'm not sure it's the right one. I've heard about your study as well, but I thought it was older than 2005. You can read the study I linked and look up the references. There are quite a lot that touch the same subject.

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