IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v95y2011i3p300-310.html
   My bibliography  Save this article

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

Author

Listed:
  • 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.

Suggested Citation

  • Pudney, Stephen, 2011. "Perception and retrospection: The dynamic consistency of responses to survey questions on wellbeing," Journal of Public Economics, Elsevier, vol. 95(3), pages 300-310.
    • Handle: RePEc:eee:pubeco:v:95:y:2011:i:3:p:300-310
    DOI: 10.1016/j.jpubeco.2010.08.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272710001106
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2010.08.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Martin Ravallion & Michael Lokshin, 2001. "Identifying Welfare Effects from Subjective Questions," Economica, London School of Economics and Political Science, vol. 68(271), pages 335-357, August.
    3. Hajivassiliou, Vassilis A. & Ruud, Paul A., 1986. "Classical estimation methods for LDV models using simulation," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 40, pages 2383-2441, Elsevier.
    4. 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.
    5. Bénédicte Vidaillet & V. d'Estaintot & P. Abécassis, 2005. "Introduction," Post-Print hal-00287137, HAL.
    6. 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.
    7. J. Dominitz & C. F. Manski, "undated". "Using expectations data to study subjective income expectations," Institute for Research on Poverty Discussion Papers 1050-94, University of Wisconsin Institute for Research on Poverty.
    8. Nicoletti, Cheti & Peracchi, Franco & Foliano, Francesca, 2007. "Estimating income poverty in the presence of measurement error and missing data problems," ISER Working Paper Series 2007-15, Institute for Social and Economic Research.
    9. Erik Schokkaert, 2007. "Capabilities and Satisfaction with Life," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 8(3), pages 415-430.
    10. McFadden, Daniel & Ruud, Paul A, 1994. "Estimation by Simulation," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 591-608, November.
    11. 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.
    12. John Muellbauer & Anthony Murphy, 2008. "Housing markets and the economy: the assessment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(1), pages 1-33, spring.
    13. Sugden, Robert, 1993. "Welfare, Resources, and Capabilities: A Review [Inequality Reexamined]," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1947-1962, December.
    14. 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 363-380, August.
    15. Goffe, William L. & Ferrier, Gary D. & Rogers, John, 1994. "Global optimization of statistical functions with simulated annealing," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 65-99.
    16. Pudney, Stephen & Francavilla, Francesca, 2006. "Income mis-measurement and the estimation of poverty rates: an analysis of income poverty in Albania," ISER Working Paper Series 2006-35, Institute for Social and Economic Research.
    17. 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, January.
    18. 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, July.
    19. Ravallion, Martin & Lokshin, Michael, 2001. "Identifying Welfare Effects from Subjective Questions," Economica, London School of Economics and Political Science, vol. 68(271), pages 335-357, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. R. Bollinger, Christopher & 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.
    3. Chrysanthou, Georgios Marios & Guilló, María Dolores, 2021. "Identifying the Economic Determinants of Individual Voting Behaviour in UK General Elections," QM&ET Working Papers 21-2, University of Alicante, D. Quantitative Methods and Economic Theory.
    4. L. Booker, Cara & Pudney, Stephen, 2013. "In sickness and in health? Comorbidity in older couples," ISER Working Paper Series 2013-30, Institute for Social and Economic Research.
    5. Anita Ratcliffe & Karl Taylor, 2013. "Who Cares about Stock Market Booms and Busts? Evidence from Data on Mental Wellbeing," Working Papers 2012021, The University of Sheffield, Department of Economics.
    6. Tomasz Potocki & Sylwester Białowąs, 2023. "What Factors Predict a Positive Change in a Consumer’s Financial Capability over Time? The New Evidence from Poland," Journal of Family and Economic Issues, Springer, vol. 44(3), pages 634-654, September.
    7. Nurul Shahnaz Mahdzan & Rozaimah Zainudin & Mohd Edil Abd. Sukor & Fauzi Zainir & Wan Marhaini Wan Ahmad, 2019. "Determinants of Subjective Financial Well-Being Across Three Different Household Income Groups in Malaysia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 146(3), pages 699-726, December.
    8. Adrian Chadi, 2019. "Dissatisfied with life or with being interviewed? Happiness and the motivation to participate in a survey," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(3), pages 519-553, October.
    9. 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.
    10. Anita Ratcliffe, 2015. "Wealth Effects, Local Area Attributes, and Economic Prospects: On the Relationship between House Prices and Mental Wellbeing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(1), pages 75-92, March.
    11. Anna Maffioletti, Agata Maida, Francesco Scacciati, 2019. "Happiness, life satisfaction, well-being: survey design and response analysis," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 16(2), pages 277-312, December.
    12. Rui Xue & Adrian Gepp & Terry J. O'Neill & Steven Stern & Bruce J. Vanstone, 2020. "Financial well‐being amongst elderly Australians: the role of consumption patterns and financial literacy," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 4361-4386, December.
    13. Begoña Álvarez, 2022. "The Best Years of Older Europeans’ Lives," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 160(1), pages 227-260, February.
    14. Orcun Kaya, 2014. "Is perceived financial inadequacy persistent?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 636-654, December.
    15. Hernandez-Alava, Monica & Pudney, Stephen, 2015. "BICOP: a Stata command for fitting bivariate ordinal regressions with residual dependence characterised by a copula function and normal mixture marginals," Understanding Society Working Paper Series 2015-02, Understanding Society at the Institute for Social and Economic Research.
    16. Luisa Corrado & Majlinda Joxhe, 2016. "The Effect of Survey Design on Extreme Response Style: Rating Job Satisfaction," CEIS Research Paper 365, Tor Vergata University, CEIS, revised 08 Feb 2016.
    17. Stephen J Aguilar & Clare Baek, 2020. "Sexual harassment in academe is underreported, especially by students in the life and physical sciences," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-18, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Koen Decancq & Marc Fleurbaey & Erik Schokkaert, 2015. "Happiness, Equivalent Incomes and Respect for Individual Preferences," Economica, London School of Economics and Political Science, vol. 82, pages 1082-1106, December.
    2. Nicolai Suppa, 2012. "Does Capability Deprivation Hurt? – Evidence from German Panel Data," Ruhr Economic Papers 0359, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Suppa, Nicolai, 2012. "Does Capability Deprivation Hurt? – Evidence from German Panel Data," Ruhr Economic Papers 359, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. repec:zbw:rwirep:0359 is not listed on IDEAS
    5. Susanne Väth & Michael Kirk, 2014. "Do property rights and contract farming matter for rural development? Evidence from a large-scale investment in Ghana," MAGKS Papers on Economics 201416, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Adrian Chadi, 2019. "Dissatisfied with life or with being interviewed? Happiness and the motivation to participate in a survey," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(3), pages 519-553, October.
    7. Weiping Kostenko, 2009. "Does Labour Market Achievement Matter for the Wellbeing of Australian Immigrants? Culture and Gender Differences," Melbourne Institute Working Paper Series wp2009n21, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    8. Orcun Kaya, 2014. "Is perceived financial inadequacy persistent?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 636-654, December.
    9. Graham, Carol & Nikolova, Milena, 2015. "Bentham or Aristotle in the Development Process? An Empirical Investigation of Capabilities and Subjective Well-Being," World Development, Elsevier, vol. 68(C), pages 163-179.
    10. Nattavudh Powdthavee, 2010. "How much does money really matter? Estimating the causal effects of income on happiness," Empirical Economics, Springer, vol. 39(1), pages 77-92, August.
    11. Susanne Väth & Simone Gobien, 2014. "Life Satisfaction, Contract Farming and Property Rights: Evidence from Ghana," MAGKS Papers on Economics 201415, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Alois Stutzer & Bruno S. Frey, 2008. "Stress that Doesn't Pay: The Commuting Paradox," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 339-366, June.
    13. KNIGHT, John & SONG, Lina & GUNATILAKA, Ramani, 2009. "Subjective well-being and its determinants in rural China," China Economic Review, Elsevier, vol. 20(4), pages 635-649, December.
    14. Ana I. Moro Egido & Maria Navarro & Ángeles Sánchez-Domínguez, 2017. "Changes in Subjective Well-Being Over Time in Germnay," ThE Papers 17/05, Department of Economic Theory and Economic History of the University of Granada..
    15. Kaminski, Jonathan, 2011. "Subjective Wealth, Policy Change, and Political Opinions: Evidence from the Cotton Reform in Burkina Faso," Discussion Papers 119531, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    16. Conchita D'Ambrosio & Joachim R. Frick, 2012. "Individual Wellbeing in a Dynamic Perspective," Economica, London School of Economics and Political Science, vol. 79(314), pages 284-302, April.
    17. Welsch, Heinz & Bonn, Udo, 2008. "Economic convergence and life satisfaction in the European Union," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(3), pages 1153-1167, June.
    18. Leonardo Becchetti & Luisa Corrado & Fiammetta Rossetti, 2011. "The Heterogeneous Effects of Income Changes on Happiness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 104(3), pages 387-406, December.
    19. Claudia Senik, 2008. "Ambition and Jealousy: Income Interactions in the ‘Old’ Europe versus the ‘New’ Europe and the United States," Economica, London School of Economics and Political Science, vol. 75(299), pages 495-513, August.
    20. Claudia Senik & Andrew E. Clark, 2007. "La croissance rend-elle heureux ? La réponse des données subjectives," PSE Working Papers halshs-00588314, HAL.
    21. Leonardo Becchetti & Alessandra Pelloni, 2013. "What are we learning from the life satisfaction literature?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(2), pages 113-155, June.

    More about this item

    Keywords

    Financial wellbeing; Perceptions; Dynamic adjustment; BHPS;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:95:y:2011:i:3:p:300-310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.