To what extent are stated preferences consistent with satisfaction? An empirical exercise for Belgium
Details
- Supervisors
- Faculty
- Degree label
- Abstract
- In the literature about measuring well-being there is some skepticism towards the equivalent income approach, due to the use of rational preferences when there are differences between perceived utility and real after-decision utility. Focusing on this concern, the present work constructs an empirical model to determine the extent to which stated preferences are inconsistent with satisfaction data. Using MEqIN data set and satisfaction as a proxy of utility, a regression generates the coefficients that reveal the individual willingness-to-pay for an ideal state, which is compared with the stated value by the person. The differences between the two values highlight the inconsistencies, that are studied by socio-demographic characteristics, in order to find some patterns. The findings contribute to the existing literature illustrating a large extent of inconsistencies. Despite that, they lead to similar outcomes in different scenarios, which allows methodological comparison. In conclusion, two facts influence the magnitude of the differences. First, a positive correlation with income for a big group of observations: the higher the income, the greater the inconsistency. Second, the exclusion of some variables from the regression decreases the weight of non-income variables in the estimated WTP. On the other hand, a new research question for behavioural welfare emerges, because this positive correlation may stem from changes in the decision-making process when income is high, so the preferences over the well-being dimensions could be different than the values estimated here for all population.
Citations
Picado Garro, F. (2019). To what extent are stated preferences consistent with satisfaction? An empirical exercise for Belgium. https://dial-mem.test.bib.ucl.ac.be/handle/2078.2/14580