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When experienced and decision utility concur: The case of income comparisons

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  • Andrew E. Clark

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Claudia Senik

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UP4 - Université Paris-Sorbonne)

  • Katsunori Yamada

    (Kindai University)

Abstract

While there is now something of a consensus in the economics of happiness literature that income comparisons to others help determine subjective well-being, debate continues over the relative importance of own and reference-group income, in particular in research on the Easterlin paradox. The variety of results in this domain have produced some scepticism regarding happiness analysis, and in particular with respect to the measurement of reference-group income. We here use data from an original Internet survey in Japan to compare the relative-income results from happiness regressions to those from hypothetical-choice experiments. This kind of validation of experienced utility via direct comparison with decision utility remains rare in this literature.

Suggested Citation

  • Andrew E. Clark & Claudia Senik & Katsunori Yamada, 2017. "When experienced and decision utility concur: The case of income comparisons," PSE-Ecole d'économie de Paris (Postprint) halshs-01630336, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01630336
    DOI: 10.1016/j.socec.2017.07.002
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. When Experienced and Decision Utility Concur: The Case of Income Comparisons By: Clark, Andrew E. (Paris School of Economics) ; Senik, Claudia (Paris School of Economics) ; Yamada, Katsunori (Kindai University)
      by maximorossi in NEP-LTV blog on 2015-07-30 22:22:41

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    1. Goerke, Laszlo & Pannenberg, Markus, 2015. "Direct evidence for income comparisons and subjective well-being across reference groups," Economics Letters, Elsevier, vol. 137(C), pages 95-101.
    2. Kaiser, Caspar, 2018. "People do not adapt to income changes: A re-evaluation of the dynamic effects of (reference) income on life satisfaction with GSOEP and UKHLS data," MPRA Paper 89867, University Library of Munich, Germany.
    3. Dolan, Paul & Foy, Chloe & Kavetsos, Georgios & Kudrna, Laura, 2021. "Faster, higher, stronger… and happier? Relative achievement and marginal rank effects," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 95(C).
    4. Daniel Reck & Arthur Seibold, 2022. "The Welfare Economics of Reference Dependence," CESifo Working Paper Series 9999, CESifo.
    5. Ricardo Perez-Truglia, 2020. "The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment," American Economic Review, American Economic Association, vol. 110(4), pages 1019-1054, April.
    6. Kaiser, Caspar, 2020. "People do not adapt. New analyses of the dynamic effects of own and reference income on life satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 494-513.
    7. Piekalkiewicz, Marcin, 2016. "Money, Social Capital and Materialism. Evidence from Happiness Data," EconStor Preprints 130185, ZBW - Leibniz Information Centre for Economics.
    8. Jean-Alain Heraud & Phu Nguyen-Van & Thi Kim Cuong Pham, 2023. "Public services, environmental quality and subjective well-being in a European city: the case of Strasbourg metropolitan area," Post-Print hal-04384531, HAL.
    9. Brown, Donna & Wadsworth, Jonathan, 2022. "Accidents will happen: (de)regulation of health and safety legislation, workplace accidents and self employment," LSE Research Online Documents on Economics 117890, London School of Economics and Political Science, LSE Library.
    10. Alpaslan Akay & Olivier B. Bargain & H. Xavier Jara, 2023. "Experienced versus decision utility: large‐scale comparison for income–leisure preferences," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(4), pages 823-859, October.
    11. Alpaslan Akay & Olivier Bargain & H. Xavier Jara, 2020. "‘Fair’ welfare comparisons with heterogeneous tastes: subjective versus revealed preferences," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 55(1), pages 51-84, June.
    12. Laszlo Goerke & Michael Neugart, 2021. "Social preferences, monopsony and government intervention," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(2), pages 864-891, May.
    13. Yongwei Chen & Dahai Fu & Xinyue Ye, 2021. "Income comparison and happiness: The role of fair income distribution," Australian Economic Papers, Wiley Blackwell, vol. 60(1), pages 41-63, March.
    14. Akay, Alpaslan & Bargain, Olivier B. & Jara, H. Xavier, 2017. "Back to Bentham, Should We? Large-Scale Comparison of Experienced versus Decision Utility," GLO Discussion Paper Series 52, Global Labor Organization (GLO).
    15. Andrew E. Clark & Claudia Senik & Katsunori Yamada, 2022. "The Joneses in Japan: income comparisons and financial satisfaction," The Japanese Economic Review, Springer, vol. 73(2), pages 351-372, April.
    16. Mageli, Ingvild & Mannberg, Andrea & Heen, Eirik Eriksen, 2022. "With whom, and about what, do we compete for social status? Effects of social closeness and relevance of reference groups for positional concerns," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    17. Jean-Alain Héraud & Phu Nguyen-Van & Thi Kim Cuong Pham, 2020. "Public services and subjective well-being in a European city: The case of Strasbourg metropolitan area," Working Papers of BETA 2020-21, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    18. Sun Youn Lee & Fumio Ohtake, 2021. "How Conscious Are You of Others? Further Evidence on Relative Income and Happiness," Journal of Happiness Studies, Springer, vol. 22(8), pages 3321-3356, December.
    19. Akay, Alpaslan & Bargain, Olivier & Jara Tamayo, H. Xavier, 2023. "Experienced versus decision utility: large-scale comparison for income-leisure preferences," LSE Research Online Documents on Economics 117746, London School of Economics and Political Science, LSE Library.
    20. Flaviana Palmisano, 2024. "Compassion and envy in distributional comparisons," Theory and Decision, Springer, vol. 96(1), pages 153-184, February.
    21. Nicolas L. Bottan & Ricardo Perez-Truglia, 2022. "Choosing Your Pond: Location Choices and Relative Income," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1010-1027, December.
    22. Ana I. Moro Egido, 2021. "Social Comparisons; the behavioural component," ThE Papers 21/04, Department of Economic Theory and Economic History of the University of Granada..
    23. Flaviana Palmisano, 2020. "Compassion and Envy in Welfare Comparisons," SOEPpapers on Multidisciplinary Panel Data Research 1105, DIW Berlin, The German Socio-Economic Panel (SOEP).

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    More about this item

    Keywords

    Satisfaction; Income comparisons; Reference-group income; Discrete-choice experiments;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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