Determinants of Satisfaction with Living Standards in Transition Societies

This article aims to analyze determinants of satisfaction with living standards in four postsocialist countries: Georgia, Hungary, Poland, and Ukraine, with a special focus on the effect of a selected reference group on satisfaction. We found that satisfaction with living standards is basically influenced by the perceived relative measure of living conditions, absolute income either has a very small impact, or no impact at all. Satisfaction with living standards is heavily influenced by the perceived relative income position of the reference group that the respondent uses as well. Comparison with a reference group with higher living standards generally results in dissatisfaction, while comparison with a group with worse living standards normally results in higher satisfaction. Citizens of postcommunist societies tend to change their frame of reference from the former Soviet bloc to (more developed) West European countries. As a consequence, even increasing living standards do not result in a large increase in satisfaction in these countries. At the same time, an optimistic approach to the future, regardless of the actual financial situation, has a positive impact, while pessimistic attitudes have a negative impact on the perception of the current living standards, in the transition societies that we have surveyed.