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Frame-of-reference bias in subjective welfare

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  • Beegle, Kathleen
  • Himelein, Kristen
  • Ravallion, Martin

Abstract

The inferences drawn from the most widely used regression models of subjective welfare are subject to a “frame-of-reference bias,” stemming from non-ignorable heterogeneity in subjective scales, such as what it means to be “rich” or “poor.” To test for this bias, respondents in Tajikistan were asked to rank the economic status of theoretical vignette households, as well as their own. Respondents are found to hold diverse scales, but there is very little bias in either the economic gradient of subjective welfare or most other coefficients of interest. These results provide a foundation for standard survey methods and regression specifications for subjective welfare data.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 81 (2012)
Issue (Month): 2 ()
Pages: 556-570

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Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:556-570

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Subjective welfare; Scales; Differential item functioning; Vignettes;

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References

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Citations

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Cited by:
  1. Bert Van Landeghem, 2012. "Panel Conditioning and Self-Reported Satisfaction: Evidence from International Panel Data and Repeated Cross-Sections," SOEPpapers on Multidisciplinary Panel Data Research 484, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Christopher R. Bollinger & Cheti Nicoletti & Stephen Pudney, 2012. "Two can live as cheaply as one... But three's a crowd," Discussion Papers 12/23, Department of Economics, University of York.
  3. Ravallion, Martin & Himelein, Kristen & Beegle, Kathleen, 2013. "Can subjective questions on economic welfare be trusted ? evidence for three developing countries," Policy Research Working Paper Series 6726, The World Bank.
  4. Ravallion, Martin, 2012. "Poor, or just feeling poor ? on using subjective data in measuring poverty," Policy Research Working Paper Series 5968, The World Bank.
  5. Adam Eric Greenberg, 2013. "When imagining future wealth influences risky decision making," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(3), pages 268-277, May.

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