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Frame-of-reference bias in subjective welfare

Author

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  • Beegle, Kathleen
  • Himelein, Kristen
  • Ravallion, Martin

Abstract

The inferences drawn from the most widely used regression models of subjective welfare are subject to a “frame-of-reference bias,” stemming from non-ignorable heterogeneity in subjective scales, such as what it means to be “rich” or “poor.” To test for this bias, respondents in Tajikistan were asked to rank the economic status of theoretical vignette households, as well as their own. Respondents are found to hold diverse scales, but there is very little bias in either the economic gradient of subjective welfare or most other coefficients of interest. These results provide a foundation for standard survey methods and regression specifications for subjective welfare data.

Suggested Citation

  • Beegle, Kathleen & Himelein, Kristen & Ravallion, Martin, 2012. "Frame-of-reference bias in subjective welfare," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 556-570.
  • Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:556-570
    DOI: 10.1016/j.jebo.2011.07.020
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    Cited by:

    1. repec:bla:econom:v:84:y:2017:i:334:p:210-238 is not listed on IDEAS
    2. Yang, Jidong & Liu, Kai & Zhang, Yiran, 2015. "Happiness Inequality in China," MPRA Paper 66623, University Library of Munich, Germany.
    3. 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.
    4. van Landeghem, Bert & Vandeplas, Anneleen, 2017. "The Relationship between Status and Happiness: Evidence from the Caste System in Rural India," IZA Discussion Papers 11099, Institute for the Study of Labor (IZA).
    5. Ravallion, Martin & Himelein, Kristen & Beegle, Kathleen, 2013. "Can subjective questions on economic welfare be trusted ? evidence for three developing countries," Policy Research Working Paper Series 6726, The World Bank.
    6. Stillman, Steven & Gibson, John & McKenzie, David & Rohorua, Halahingano, 2015. "Miserable Migrants? Natural Experiment Evidence on International Migration and Objective and Subjective Well-Being," World Development, Elsevier, vol. 65(C), pages 79-93.
    7. Kelly Kilburn & Sudhanshu Handa & Gustavo Angeles & Peter Mvula & Maxton Tsoka & UNICEF Office of Research - Innocenti, 2016. "Happiness and Alleviation of Income Poverty: Impacts of an unconditional cash transfer programme using a subjective well-being approach," Papers inwopa857, Innocenti Working Papers.
    8. repec:eee:ecolet:v:163:y:2018:i:c:p:17-21 is not listed on IDEAS
    9. Bert Van Landeghem & Anneleen Vandeplas, 2016. "Lower in rank, but happier: the complex relationship between status and happiness," LICOS Discussion Papers 38516, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    10. repec:spr:jhappi:v:19:y:2018:i:2:d:10.1007_s10902-016-9835-9 is not listed on IDEAS
    11. repec:spr:soinre:v:132:y:2017:i:1:d:10.1007_s11205-016-1266-9 is not listed on IDEAS
    12. Niimi, Yoko, 2015. "Can happiness provide new insights into social inequality? Evidence from Japan," MPRA Paper 64720, University Library of Munich, Germany.
    13. Ravallion, Martin, 2012. "Poor, or just feeling poor ? on using subjective data in measuring poverty," Policy Research Working Paper Series 5968, The World Bank.
    14. Bert Van Landeghem, 2012. "Panel Conditioning and Self-Reported Satisfaction: Evidence from International Panel Data and Repeated Cross-Sections," SOEPpapers on Multidisciplinary Panel Data Research 484, DIW Berlin, The German Socio-Economic Panel (SOEP).
    15. Michal Brzezinski, 2017. "Diagnosing unhappiness dynamics: Evidence from Poland and Russia," Working Papers 2017-27, Faculty of Economic Sciences, University of Warsaw.
    16. Adam Eric Greenberg, 2013. "When imagining future wealth influences risky decision making," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(3), pages 268-277, May.
    17. Koen Decancq & Marc Fleurbaey & Erik Schokkaert, 2017. "Wellbeing Inequality and Preference Heterogeneity," Economica, London School of Economics and Political Science, vol. 84(334), pages 210-238, April.
    18. Rossouw Laura, 2015. "Poor Health Reporting: Do Poor South Africans Underestimate Their Health Needs?," WIDER Working Paper Series 027, World Institute for Development Economic Research (UNU-WIDER).
    19. repec:spr:jhappi:v:18:y:2017:i:6:d:10.1007_s10902-016-9797-y is not listed on IDEAS
    20. Hirfrfot, Kibrom & Barrett, Christopher B. & Lentz, Erin C. & Taddesse, Birhanu, 2014. "The Subjective Well-being Effects of Imperfect Insurance that Doesn’t Pay Out," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 173478, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Subjective welfare; Scales; Differential item functioning; Vignettes;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D60 - Microeconomics - - Welfare Economics - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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