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Keeping Up with the Neighbors? Reference Groups in Ghana

Lyndon B. Johnson School of Public Affairs

In this article, I ask how a respondent-centered understanding of reference groups might offer new insights into the study of subjective well-being. Analyzing unique microlevel data from rural Ghana, I examine the influence of reference groups’ economic characteristics on respondents’ perceptions of their economic well-being. I find that the way a reference group is defined is strongly associated with whether respondents experience relative deprivation or positive effects. As in other studies, an increase in the economic status of spatially defined reference groups is associated with relative deprivation. In contrast, findings from reference groups defined with social network data on gift receipt or trust are more complex. Respondents are likelier to report higher levels of subjective well-being when their social networks’ assets increase and expenditures decrease. That is, respondents feel better when the people they trust or the people they have received gifts from are wealthy but thrifty. This likely indicates that respondents hope to draw on members from these “potential helper” networks in times of need.