Previous research has shown that both absolute and relative levels of income independently predict subjective well-being. Specifically, the income of proximal or salient comparison standards is negatively associated with life satisfaction, even controlling for personal income. Social comparison - the evaluation of one's standings relative to one's peers - is one mechanism through which relative income might influence life satisfaction. The purpose of the current study was to examine the social comparison effect of county income and its moderators. Multilevel analyses were conducted on a sample of over 1.7 million Americans. Average county income was negatively associated with life satisfaction after controlling for personal income. In addition, the size and population density of the counties (variables that reflect entitativity) and income inequality moderated this effect. The current study provides evidence for social comparison as an explanation of the association between income and well-being.
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