Premium
Income distribution and well‐being: what can we learn from subjective data?
Author(s) -
Senik Claudia
Publication year - 2005
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.0950-0804.2005.00238.x
Subject(s) - economics , affect (linguistics) , income distribution , welfare , distribution (mathematics) , public economics , preference , scope (computer science) , survey data collection , inequality , microeconomics , economic inequality , action (physics) , econometrics , psychology , computer science , mathematical analysis , statistics , physics , mathematics , communication , quantum mechanics , programming language , market economy
. 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 (preference 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 egalitarian nature of mobility itself, so that 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.