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Hedonic recall bias. Why you should not ask people how much they earn

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  • Alberto Prati

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

The empirical literature which explores the effect of wage on job satisfaction typically uses data drawn from social surveys. In these surveys, the amount of wage is reported by the respondents themselves: thus, the explanatory variable of the econometric models may differ from the true wage people earn. Our paper shows that the use of survey data can lead to considerable over-estimation of the importance of wage as a determinant of wage satisfaction. In particular, responses seem to be affected by a recall bias: people who are satisfied with their wage are more likely to over-report their wage in questionnaires. The more satisfied they are the more they over-report (and vice versa unsatisfied people). We name this behavioral disposition "hedonic recall bias".

Suggested Citation

  • Alberto Prati, 2017. "Hedonic recall bias. Why you should not ask people how much they earn," Post-Print hal-01676683, HAL.
    • Handle: RePEc:hal:journl:hal-01676683
    DOI: 10.1016/j.jebo.2017.09.002
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    3. Kaiser, Caspar, 2022. "Using memories to assess the intrapersonal comparability of wellbeing reports," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 410-442.
    4. Suarez-Fernandez, Sara & Perez-Villadoniga, Maria J. & Prieto-Rodriguez, Juan, 2022. "Price salience in opinion polls and observed behavior: The case of Spanish cinema," Economic Modelling, Elsevier, vol. 111(C).
    5. Grissom, Jason A. & Timmer, Jennifer D. & Nelson, Jennifer L. & Blissett, Richard S.L., 2021. "Unequal pay for equal work? Unpacking the gender gap in principal compensation," Economics of Education Review, Elsevier, vol. 82(C).
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    More about this item

    Keywords

    Recall bias Job satisfaction Wage satisfaction Measurement error Survey income;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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