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Jürges, Hendrik

The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Ludwig, Sandra / Schmitz, Hendrik

Ed. by Barigozzi, Francesca / Brunner, Johann / Fleck, Robert / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / de Vries, Frans / Wenzel, Tobias

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Volume 16, Issue 3


Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life

Thomas Deckers
  • Institute of Applied Microeconomics, University of Bonn, Adenauerallee 24–42, 53113 Bonn, Germany
  • Other articles by this author:
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/ Armin Falk
  • Institute of Applied Microeconomics, University of Bonn, Adenauerallee 24–42, 53113 Bonn, Germany
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Hannah Schildberg-Hörisch
  • Corresponding author
  • Institute of Applied Microeconomics, University of Bonn, Adenauerallee 24–42, 53113 Bonn, Germany
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Published Online: 2016-06-08 | DOI: https://doi.org/10.1515/bejeap-2015-0215


According to economic theory, real income, i. e., nominal income adjusted for purchasing power, should be the relevant source of life satisfaction. Previous work, however, has studied the impact of inflation-adjusted nominal income and hardly taken into account regional differences in purchasing power. We use novel data to study how regional price levels affect life satisfaction. The data set comprises a price level for each of the 428 administrative districts in Germany. Controlling for district heterogeneity other than the price level, our results show that higher price levels significantly reduce life satisfaction.

Keywords: life satisfaction; neutrality of money; price index; real income; standard of living

JEL Classification: D60; C23; D31


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About the article

Published Online: 2016-06-08

Published in Print: 2016-07-01

Financial support from the German Science Foundation “Deutsche Forschungsgemeinschaft” (that did not influence study design or interpretation of the results) through SFB-TR 15 is gratefully acknowledged.

Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 16, Issue 3, Pages 1337–1358, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: https://doi.org/10.1515/bejeap-2015-0215.

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