ABSTRACT
Income is one of the most important and well-studied determinants of subjective well-being (SWB), and empirical evidence indicates there is a robust positive income effect on measures of SWB. However, evidence from previous studies is inconclusive regarding the impact of relative income (RI) on reported well-being. In this study, we use original Japanese survey data collected in 2015 and reference area income derived from 500 m mesh data to examine the impact of RI on life satisfaction (LS). The results of structural equation modelling reveal that RI has a direct negative impact but an indirect positive effect on LS through community attachment. This suggests that the negative effects of reference income observed in previous studies that have not considered community attachment are likely to be overestimated. Our results also suggest that younger people are more affected by the direct negative effect of reference income than people in other age groups. Furthermore, people with a household income higher than the reference area income are not necessarily more attached to their neighbourhood; however, they are more likely to report higher LS.
