What’s wrong with the reference group effect?

Cross-cultural psychologists often compare mean scores across cultures using subjective Likert scales, but this method faces many methodological challenges. One such challenge is the reference group effect, which suggests that different normative standards distort cultural comparisons, potentially suppressing or reversing true differences. We revisit this widely discussed yet under-examined problem by testing its premise. Using data from the International Social Survey Programme and the World Values Survey, we examined the relationship between subjective socio-economic status (SES) and national wealth (GDP). If the reference group effect were true, respondents would compare themselves to their peers within their norms, leading those in wealthy countries to rate themselves as less affluent and those in developing countries to rate themselves as more affluent. This would result in a null or negative correlation between SES and GDP across countries. However, we consistently found a strong positive correlation: respondents from wealthier countries do rate themselves higher, whereas those from developing countries do rate themselves lower. Contrary to the reference group effect, respondents appear to use a single, absolute “ruler,” regardless of varying norms, and this process allows valid cross-cultural differences to emerge. Our findings call for a need to reconsider the reference group effect and encourage cross-cultural researchers to interpret cultural variation with greater confidence using Likert scales.