We analyze relative income concerns and their impact on individual welfare using detailed data on Dutch households’ consumption and labor supply. Our unique dataset includes perceived mean incomes, allowing us to assess the welfare effects of income misperceptions. Using a nonparametric revealed preference approach, we quantify these effects in money metric terms. Our results reveal that relative income concerns impose a welfare cost of at least 115 EUR per month on the average individual, with approximately one quarter of this cost attributable to income misperceptions. Additionally, we find that relative income and welfare effects vary by age, education, earnings, and household composition, with notable gender differences.