Relative deprivation as a predictor of subjective well-being and life satisfaction in times of high inflation

Abstract High inflation affects the financial situation of many people because the financial situation is an important factor in well-being and life satisfaction. The objective of our study was to explore how well-being and life satisfaction are affected by social comparison processes in a high-inflation environment. Data were collected in 2023, when yearly inflation rates were higher than 20% in Hungary. This study analysed data from online surveys of 1006 Hungarians, finding that income is negatively linked to relative deprivation. Structural equation modeling confirmed that financial optimism and perceived financial control were positively related to subjective well-behavior and life satisfaction in different income groups, while renouncement in consumer decisions and different types of relative deprivation were negatively associated with them. Mediation analysis also proved that the link between renouncement in consumer decisions and life satisfaction and well-being is mediated by relative deprivation and optimism. Multigroup analysis revealed that the observed mediation effects were more emphasized among below-median income participants. The present study demonstrates that subjective financial experiences and social comparison process play a crucial role in shaping well-being during high inflation periods.