Reinvigorating relative deprivation: A new measure for a classic concept

Over the last several decades increases in the income inequality in the United States have been well-documented. Yet, this assessment of growing prosperity for some but downslide for others is based on a specific interpretation of the concept “inequality.” This paper develops an alternative measure of inequality based on the concept “relative deprivation.” Relative deprivation refers to the frustration that is associated with a person’s relative position in a reference group. The proposed measure draws from the social science literature on poverty and improves upon an earlier measure, RD. Using data from the 1998 General Social Survey, I analyze the relationship between the proposed and earlier measures of relative deprivation, and two outcome variables: (1) self-rated health, and (2) happiness. While the measures produce similar results in predicting self-rated health, the proposed measure is a better predictor of happiness than the earlier measure. I conclude that the empirical and theoretical advantages of the proposed index make it an improved measure of relative deprivation.