Preferences and Subjective Satisfaction: Measuring Well-being on the Job for Policy Evaluation
AbstractBehavioural welfare economics has raised doubts about the use of revealed preferences as an indicator of 'true' individual well-being. Subjective satisfaction ('happiness') measures have become increasingly popular, as they seem to avoid paternalism while at the same time not being dependent on observed choice behaviour. We argue that there is a clash between using subjective satisfaction and respecting preferences, because the former also depends on aspirations. We propose the equivalent income indicator as an alternative cardinalization of the utility function. It does respect preferences but does not depend on aspirations. We apply our general ideas to one specific policy domain: monitoring job quality as individual well-being on the job. Our empirical results about the quality of jobs for school-leavers in Flanders show that the choice of a specific indicator of well-being is highly relevant from a policy point of view. The most popular measures that are in use now (the paternalist equal weights-indicator and subjective job satisfaction) may be misleading if they are not complemented by information about the other indicators. (JEL codes: J28, D63, D71) Copyright The Author 2011. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: email@example.com, Oxford University Press.
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Volume (Year): 57 (2011)
Issue (Month): 4 (December)
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Other versions of this item:
- SCHOKKAERT, Erik & VAN OOTEGEM, Luc & VERHOFSTADT, Elsy, . "Preferences and subjective satisfaction measuring well-being on the job for policy evaluation," CORE Discussion Papers RP -2374, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
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- Koen Decancq & Luc Van Ootegem & Elsy Verhofstadt, 2011.
"What if we voted on the weights of a multidimensional well-being index? An illustration with Flemish data,"
1110, Herman Deleeck Centre for Social Policy, University of Antwerp.
- Koen Decancq & Luc Van Ootegem & Elsy Verhofstadt, 2013. "What If We Voted on the Weights of a Multidimensional Well‐Being Index? An Illustration with Flemish Data," Fiscal Studies, Institute for Fiscal Studies, vol. 34, pages 315-332, 09.
- K. Decancq & L. Van Ootegem & E. Verhofstadt, 2011. "What If We Voted On The Weights Of A Multidimensional Well-Being Index? An Illustration With Flemish Data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/762, Ghent University, Faculty of Economics and Business Administration.
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