Social media and reference points: How people are affected by watching high economic status

Abstract: This paper presents an experimental survey study investigating the potential effects of social media usage on economic perceptions and life satisfaction by influencing reference points. The prediction is that watching people with high economic status on social media raises reference points, resulting in increased preferences for consumption and salary. The theoretical prediction is that this would decrease the life satisfaction of social consumers. The study does not find significant results and cannot confirm the predicted effects of social media usage. The study contributes with a theoretical background and some empirical evidence supporting the application of reference-dependent utility models in studying the effects potential effects of social media. Considering the methodological limitations of the study, it is possible that the hypotheses in this paper can be confirmed by future research projects with greater scope and resources.