Comments and Questions

I’d like to thank the referee for the useful comments. I understand the concern of the referee about data limitations and the suggestion to be more cautions when describing the contribution of the paper. I modified consequently the paper pointing out that “the existence of a positive relationship between well-being and inequality deserves to be further investigated to exclude that it depends on data specific characteristics.” (p 2, last paragraph). I also improved the discussion about data limitations in Section 4. Please see below the answers to the referee’s specific comments.1) The referee is worry about a possible high correlation between the main variables of interest (wage, upward and downwards comparisons). Indeed, these variable are correlated, but the correlation is not so high to be concerned about the estimations. See below the correlation matrix. I performed a formal detection-tolerance and the variance inflation factor (VIF) for multicollinearity. A tolerance of less than 0.20 or 0.10 and/or a VIF of 5 or 10 and above indicates a multicollinearity problem (O'Brien 2007). This is not our case, therefore there is no evidence of multicollinearity problems. Correlation | w pride envy-------------+--------------------------- wage | 1.0000 pride | 0.5346 1.0000 envy | -0.2183 -0.3148 1.0000 Collinearity Diagnostics SQRT R- Variable VIF VIF Tolerance Squared---------------------------------------------------- wage 1.41 1.19 0.7114 0.2886 pride 1.49 1.22 0.6730 0.3270 envy 1.11 1.06 0.8974 0.1026---------------------------------------------------- Mean VIF 1.34 2) I followed the suggestion of the referee to be clear that the implementation of the assumption of incomplete information about others’ wages is imposed by data availability. See Section 4, pp. 8, first paragraph.3) Figure 1 is indeed a histogram: I corrected the description of Figures 1. see Section 4, p.7, last paragraph.