Subjective well-being (SWB) is increasingly used as a way to measure individual well-being. Interpreted as “experienced utility”, it has been compared to “decision utility” using specific experiments (Kahneman et al., 1997) or stated preferences (Benjamin et al. 2012). We suggest here an original large-scale comparison between ordinal preferences elicited from SWB data and those inferred from actual choices (revealed preferences). Precisely, we focus on income-leisure preferences, closely associated to redistributive policies. We compare indifference curves consistent with income-leisure subjective satisfaction with those derived from actual labour supply choices, on the same panel of British households. Results show striking similarities between these measures on average, reflecting that overall, people’s decisions are not inconsistent with SWB maximisation. Yet, the shape of individual preferences differs across approaches when looking at specific subpopulations. We investigate these differences and test for potential explanatory channels, particularly the roles of constraints and of individual “errors” related to aspirations, expectations or focusing illusion. We draw implications of our results for welfare analysis and policy evaluation.
Presented by:
Holguer Xavier Jara Tamayo (ISER)
Date & time:
February 25, 2015 1:00 pm - February 25, 2015 2:00 pm
Venue:
Large Seminar Room (2N2.4.16)
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