Paper that is one of a series written to inform the development of equality outcomes for the Scottish Government. Guidance from the Equalities and Human Rights Commission (EHRC) states that a range of relevant evidence relating to equality groups and communities should be used to help set equality outcomes that are likely to make the biggest difference in tackling inequalities. 

In a simple 2-period model of relative income under uncertainty, higher comparison income for the younger cohort can signal higher or lower expected lifetime relative income, and hence either increase or decrease well-being. With data from the German Socio-Economic Panel and the British Household Panel Survey, this paper confirms the standard negative effects of comparison income on life satisfaction with all age groups, and many controls.