Are the responses to survey questions on well-being dynamically consistent? Vector ARMA modelling in a short panel with ordinal observation

Publication type

Conference Paper

Series

Panel Data 2006: 13th International Conference on Panel Data: 7-9 July 2006 Faculty of Economics, University of Cambridge UK

Author

Publication date

June 1, 2006

Abstract:

We develop a simulated ML estimator for a system of ARMA linear
equations in a short panel, where the dependent variables are partially observed
through ordinal scales. This is used to model households’ perceptions of financial
well-being and test the hypothesis that their answers to two questions in the British
Household Panel Survey about current and past financial well-being are consistent
with each other and with the existence of a common underlying well-being concept.
We find that current perceptions exhibit slow adjustment to changing circumstances
and that comparisons of current and retrospective perceptions are contaminated by
temporal adjustment of perceptions.

Subject

Link

http://www.econ.cam.ac.uk/panel2006/detailprog.html

#508765

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