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How reliable and consistent are subjective measures of welfare in Europe and Central Asia ? evidence from the second life in transition survey

  • Cojocaru, Alexandru
  • Diagne, Mame Fatou

This paper analyzes the reliability and consistency of subjective well-being measures. Using the Life in Transition Survey, which was administered in 34 countries of Europe and Central Asia in 2006 and 2010, the paper evaluates subjective well-being measures (satisfaction with life and subjective relative income position) against objective measures of welfare based on consumption and assets. It uses the different formulations of life satisfaction in the survey to test robustness to alternative framing and scaling. It also explores within-household differences in subjective well-being assessments. The analysis finds that subjective relative income is weakly correlated with household relative welfare position as measured by consumption or assets. Life satisfaction, by contrast, is highly correlated with objective and subjective measures of household welfare. It generally reflects cross-country differences in average consumption, assets, or per capita gross domestic product, although Central Asian countries report much higher life satisfaction levels than their incomes would suggest. Two alternative measures of life satisfaction are highly correlated and the correspondence between verbal and numeric scales is strong within a country or groupings of similar countries. Within households, subjective assessments of relative income are roughly consistent but measurement error is correlated with individual characteristics (gender and age of respondents), which could cause systematic biases in the analysis.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6359.

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Date of creation: 01 Feb 2013
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Handle: RePEc:wbk:wbrwps:6359
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  1. Sergei Guriev & Ekaterina Zhuravskaya, 2009. "(Un)happiness in Transition," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 143-68, Spring.
  2. John F. Helliwell & Christopher P. Barrington-Leigh & Anthony Harris & Haifang Huang, 2009. "International Evidence on the Social Context of Well-Being," NBER Working Papers 14720, National Bureau of Economic Research, Inc.
  3. Blanchflower, David G. & Oswald, Andrew J., 2007. "Is Well-Being U-Shaped over the Life Cycle?," IZA Discussion Papers 3075, Institute for the Study of Labor (IZA).
  4. Ravallion, Martin & Lokshin, Michael, 2002. "Self-rated economic welfare in Russia," European Economic Review, Elsevier, vol. 46(8), pages 1453-1473, September.
  5. Angus Deaton, 2011. "The Financial Crisis and the Well-Being of America," NBER Chapters, in: Investigations in the Economics of Aging, pages 343-368 National Bureau of Economic Research, Inc.
  6. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
  7. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
  8. van Praag, Bernard M. S., 2004. "The Connexion between Old and New Approaches to Financial Satisfaction," IZA Discussion Papers 1162, Institute for the Study of Labor (IZA).
  9. van Praag, Bernard M. S., 1991. "Ordinal and cardinal utility : An integration of the two dimensions of the welfare concept," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 69-89, October.
  10. John F. Helliwell & Christopher P. Barrington-Leigh, 2010. "Viewpoint: Measuring and understanding subjective well-being," Canadian Journal of Economics, Canadian Economics Association, vol. 43(3), pages 729-753, August.
  11. Beegle, Kathleen & De Weerdt, Joachim & Friedman, Jed & Gibson, John, 2012. "Methods of household consumption measurement through surveys: Experimental results from Tanzania," Journal of Development Economics, Elsevier, vol. 98(1), pages 3-18.
  12. repec:pri:cheawb:deaton_income_health_and_wellbeing_around_the_world_evidence_%20from_gallup_world_poll_jep_spring2008 is not listed on IDEAS
  13. Deon Filmer & Lant Pritchett, 2001. "Estimating Wealth Effects Without Expenditure Data—Or Tears: An Application To Educational Enrollments In States Of India," Demography, Springer, vol. 38(1), pages 115-132, February.
  14. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
  15. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
  16. John F. Helliwell, 2008. "Life Satisfaction and Quality of Development," NBER Working Papers 14507, National Bureau of Economic Research, Inc.
  17. Martin Ravallion & Michael Lokshin, 2006. "Testing Poverty Lines," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(3), pages 399-421, 09.
  18. Angus Deaton, 2008. "Income, Health, and Well-Being around the World: Evidence from the Gallup World Poll," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 53-72, Spring.
  19. Paul Dolan & Richard Layard & Robert Metcalfe, 2011. "Measuring subjective well-being for public policy," LSE Research Online Documents on Economics 35420, London School of Economics and Political Science, LSE Library.
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