Premium
Identifying Welfare Effects from Subjective Questions
Author(s) -
Ravallion Martin,
Lokshin Michael
Publication year - 2001
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/1468-0335.00250
Subject(s) - respondent , welfare , unemployment , economics , demographic economics , work (physics) , per capita income , public economics , survey data collection , econometrics , labour economics , economic growth , statistics , sociology , political science , demography , mechanical engineering , mathematics , engineering , law , market economy
We argue that the welfare inferences drawn from answers to subjective–qualitative survey questions are clouded by concerns over the structure of measurement errors and how latent psychological factors influence observed respondent characteristics. We propose a panel data model that allows more robust tests and we estimate the model on a high‐quality survey for Russia. We find significant income effects on an individual’s subjective economic welfare. Demographic effects are weak at given income per capita. Ill‐health and becoming unemployed lower welfare at given current income, although the unemployment effect is not robust, and returning to work does not restore welfare without an income gain.