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Macroeconomic Preferences by Income and Education Level: Evidence from Subjective Well-Being Data

Author

Listed:
  • Heinz Welsch

    () (Department of Economics, University of Oldenburg 26111 Oldenburg, GERMANY)

  • Jan K¨¹hling

    () (Department of Economics, University of Oldenburg 26111 Oldenburg, GERMANY)

Abstract

Using subjective well-being data for more than 91,000 individuals in 30 OECD countries from 1990 to 2008, we study how people¡¯s implicit aversion towards inflation and unemployment varies with income and education. While inflation aversion decreases with income and increases with the education level, unemployment aversion is independent of income and decreases with the level of education. In spite of income and education dependence, aversion towards inflation is less than aversion towards unemployment not just on average but at all levels of income and education. This suggests that issues of social incidence are not a dominant concern for macroeconomic policy making on anti-inflation and anti-unemployment policies.

Suggested Citation

  • Heinz Welsch & Jan K¨¹hling, 2015. "Macroeconomic Preferences by Income and Education Level: Evidence from Subjective Well-Being Data," Review of Economics & Finance, Better Advances Press, Canada, vol. 5, pages 15-32, August.
  • Handle: RePEc:bap:journl:150302
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Inflation; Unemployment; Preference; Social incidence; Subjective well-being;

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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