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Subjective Measures of Economic Well-Being and the Influence of Income Uncertainty

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  • Schwarze, Johannes

    (University of Bamberg)

Abstract

This paper provides evidence that subjective measures of individual well being can be used to study the impact of income uncertainty from an ex ante point of view. Two different measures of subjective well being are under study: Satisfaction with household income and the income evaluation question as developed by Van Praag. It can be shown that satisfaction with income is more affected by ex ante than by ex post volatility of income. The ordinal version of the Van Praag approach might be biased if income uncertainty is essential. The paper was written in 1994.

Suggested Citation

  • Schwarze, Johannes, 2008. "Subjective Measures of Economic Well-Being and the Influence of Income Uncertainty," IZA Discussion Papers 3720, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3720
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    References listed on IDEAS

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    1. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    2. Blanchard, Olivier Jean & Mankiw, N Gregory, 1988. "Consumption: Beyond Certainty Equivalence," American Economic Review, American Economic Association, vol. 78(2), pages 173-177, May.
    3. Brigitte Buhmann & Lee Rainwater & Guenther Schmaus & Timothy M. Smeeding, 1988. "Equivalence Scales, Well‐Being, Inequality, And Poverty: Sensitivity Estimates Across Ten Countries Using The Luxembourg Income Study (Lis) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
    4. Allais Maurice, 1990. "Cardinal Utility," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 1(2), pages 1-38, June.
    5. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
    6. Tom Atkinson, 1982. "The stability and validity of quality of life measures," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 10(2), pages 113-132, February.
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    Cited by:

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    2. Anna Blajer-Gołębiewska, 2021. "Individual corporate reputation and perception of collective corporate reputation regarding stock market investments," PLOS ONE, Public Library of Science, vol. 16(9), pages 1-21, September.

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    More about this item

    Keywords

    income uncertainty; subjective well-being; satisfaction; income evaluation;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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