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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 ()
Pages: 300-310

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:3: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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  4. 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.
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  8. Pudney, Stephen, 2006. "The dynamics of perception: modelling subjective well-being in a short panel," ISER Working Paper Series 2006-27, Institute for Social and Economic Research.
  9. Ravallion, Martin & Lokshin, Michael, 2001. "Identifying Welfare Effects from Subjective Questions," Economica, London School of Economics and Political Science, vol. 68(271), pages 335-57, August.
  10. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
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Cited by:
  1. 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.
  2. Booker, Cara L. & Pudney, Stephen, 2013. "In sickness and in health? Comorbidity in older couples," ISER Working Paper Series 2013-30, Institute for Social and Economic Research.
  3. 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).
  4. Bollinger, Christopher R. & Nicoletti, Cheti & Pudney, Stephen, 2012. "Two can live as cheaply as one... but three's a crowd," ISER Working Paper Series 2012-10, Institute for Social and Economic Research.

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