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Perception and retrospection: The dynamic consistency of responses to survey questions on wellbeing

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  • Pudney, Stephen

Abstract

Implementation of broad approaches to welfare analysis usually entails the use of 'subjective' welfare indicators. We analyse BHPS data on financial wellbeing to determine whether reported current and retrospective perceptions are consistent with each other and with the existence of a common underlying wellbeing concept. We allow for adjustment of perceptions in a vector ARMA model for panel data, with dependent variables observed ordinally and find that current perceptions exhibit slow adjustment to changing circumstances and retrospective assessments of past wellbeing are heavily contaminated by current circumstances, causing significant bias in measures of the level and change in welfare.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 3-4 (April)
Pages: 300-310

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:3-4:p:300-310

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Web page: http://www.elsevier.com/locate/inca/505578

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Keywords: Financial wellbeing Perceptions Dynamic adjustment BHPS;

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References

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  1. Vassilis A. Hajivassiliou and Paul A. Ruud., 1993. "Classical Estimation Methods for LDV Models Using Simulation," Economics Working Papers 93-219, University of California at Berkeley.
  2. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
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  4. Jeff Dominitz & Charles F. Manski, 1994. "Using Expectations Data to Study Subjective Income Expectations," NBER Working Papers 4937, National Bureau of Economic Research, Inc.
  5. repec:ese:iserwp:2006-35 is not listed on IDEAS
  6. Loewenstein, George & Ubel, Peter A., 2008. "Hedonic adaptation and the role of decision and experience utility in public policy," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1795-1810, August.
  7. Bruce D. Meyer & James X. Sullivan, 2003. "Measuring the Well-Being of the Poor Using Income and Consumption," NBER Working Papers 9760, National Bureau of Economic Research, Inc.
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  10. Henley, Andrew, 1998. "Changes in the Distribution of Housing Wealth in Great Britain, 1985-91," Economica, London School of Economics and Political Science, vol. 65(259), pages 363-80, August.
  11. Erik Schokkaert, 2007. "Capabilities and Satisfaction with Life," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 8(3), pages 415-430.
  12. Paul Anand & Graham Hunter & Ian Carter & Keith Dowding & Francesco Guala & Martin Van Hees, 2009. "The Development of Capability Indicators," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 10(1), pages 125-152.
  13. Gabriella Conti & Stephen Pudney, 2011. "Survey Design and the Analysis of Satisfaction," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 1087-1093, August.
  14. Stephen Pudney, 2008. "The dynamics of perception: modelling subjective wellbeing in a short panel," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(1), pages 21-40.
  15. repec:ese:iserwp:2007-15 is not listed on IDEAS
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Cited by:
  1. 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.
  2. Adrian Chadi, 2014. "Dissatisfied with Life or with Being Interviewed? Happiness and Motivation to Participate in a Survey," IAAEU Discussion Papers 201403, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  3. Binder, Martin & Coad, Alex, 2013. "“I'm afraid I have bad news for you…” Estimating the impact of different health impairments on subjective well-being," Social Science & Medicine, Elsevier, vol. 87(C), pages 155-167.
  4. repec:ese:iserwp:2013-30 is not listed on IDEAS

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