What Can we Learn from Subjective Data ? The Case of Income and Well-Being
How does the income of others affect my own welfare ? This survey of the empirical literature stresses the contribution of subjective data to the understanding of this issue, with an attempt to disentangle direct effects (preferences interdependence) from indirect informational effects. It shows that perceived mobility is central to the link between other people’s income and individual satisfaction, as it determines individual opportunities and risks. Agents also appreciate the equalitarian nature of mobility itself, in which case individual welfare depends on dynamic inequality rather than static income distribution. These studies illustrate how subjective data can bring information on aspects of utility and social interactions that are beyond the scope of the method based on action-revealed preferences.
|Date of creation:||Mar 2003|
|Date of revision:||Oct 2003|
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