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Subjective aspects of economic poverty. Ordered response model approach

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  • Hanna Dudek

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    (Warsaw University of Life Sciences)

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    Abstract

    Paper analyses subjective economic welfare and well-being in Polish households. The study is based on the Household Budget Survey carried out by the Central Statistical Office in Poland. Subjective measures are estimated using households’ answers to questions about the own satisfaction with their financial situation. The inspiration for this research comes from Schwarze’s article [2003] where ordered logit model was applied to estimate the equivalence scale elasticity. Such model implicitly assumes that the effects of the explanatory variables are identical at each cut-off point between categories, what is known as the “parallel regression assumption”. Paper indicates the violation of this assumption for the sample of Polish households of retirees as the whole, while the assumption cannot be rejected when we exclude the poorest and richest households. Some of the paper’s results are similar to typical findings in poverty research, such as U-shaped relationship between age and subjective income satisfaction. Different results are found with regard to gender of household head. Also, as compared with other research for Polish data, the method applied here produces higher equivalence scale elasticity.

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    File URL: http://kolegia.sgh.waw.pl/pl/KAE/struktura/IE/struktura/ZES/Documents/Working_Papers/aewp08-08.pdf
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    Bibliographic Info

    Paper provided by Department of Applied Econometrics, Warsaw School of Economics in its series Working Papers with number 29.

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    Length: 19 pages
    Date of creation: 27 Oct 2008
    Date of revision:
    Handle: RePEc:wse:wpaper:29

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    Keywords: subjective economic welfare; equivalence scale elasticity; logit model;

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    References

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    1. Kapteyn, A.J., 1994. "The measurement of household cost functions: Revealed preference versus subjective measures," Open Access publications from Tilburg University urn:nbn:nl:ui:12-364386, Tilburg University.
    2. Ada Ferrer-i-Carbonell & Bernard M.S. Van Praag, 2002. "Income Satisfaction Inequality and its Causes," Tinbergen Institute Discussion Papers 02-014/3, Tinbergen Institute.
    3. Bruno S. Frey & Simon Luechinger & Alois Stutzer, . "Valuing Public Goods: The Life Satisfaction Approach," IEW - Working Papers 184, Institute for Empirical Research in Economics - University of Zurich.
    4. Bruno S. Frey & Alois Stutzer, . "Happiness, Economy and Institutions," IEW - Working Papers 015, Institute for Empirical Research in Economics - University of Zurich.
    5. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2002. "The Anatomy of Subjective Well-being," Tinbergen Institute Discussion Papers 02-022/3, Tinbergen Institute.
    6. Kapteyn, A.J., 1994. "The measurement of household cost functions: Revealed preference versus subjective measures," Discussion Paper 1994-3, Tilburg University, Center for Economic Research.
    7. Goedhart, T. & Halberstadt, V. & Praag, B.M.S. van & Kapteyn, A.J., 1977. "The poverty line: Concept and measurement," Open Access publications from Tilburg University urn:nbn:nl:ui:12-361898, Tilburg University.
    8. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2000. "A Structural Model of Well-being: with an application to German Data," Tinbergen Institute Discussion Papers 00-053/3, Tinbergen Institute.
    9. Johannes Schwarze, 2003. "Using Panel Data on Income Satisfaction to Estimate Equivalence Scale Elasticity," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(3), pages 359-372, 09.
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