Papers by A. Ferrer-i-carbonell
We ask individuals for their reservation price of a specified lottery and deduce their Arrow-Prat... more We ask individuals for their reservation price of a specified lottery and deduce their Arrow-Pratt measure of risk aversion. This allows direct testing of common hypotheses on risk attitudes in three datasets. We find that risk aversion indeed falls with income and wealth. Entrepreneurs are less risk averse than employees, civil servants are more risk averse than private sector employees, and women are more risk averse than men. We analyze six different specifications of the lottery question in a single data set and find quite consistent results. We conclude that a simple lottery question is a promising survey instrument to extract differences in risk attitudes among individuals.
† The authors would like to thank Rob Alessie for useful comments. The usual disclaimers apply. W... more † The authors would like to thank Rob Alessie for useful comments. The usual disclaimers apply. We are grateful to the DIW and the GSOEP- project leader Gert Wagner for making the data available to us and for giving us hospitality at DIW when setting up the present study. THE ANATOMY OF SUBJECTIVE WELL- BEING Subjective Well-Being has increasingly been studied by several economists. This paper fits in that literature but takes into account that there are different aspects of life such as health, financial situation, and job. We call them domains. In this paper, we consider Subjective Well-Being as a composite of various domain satisfactions (DS). We postulate a two –layer model where individual Subjective Well-Being is explained by individual subjective domain satisfactions with respect to job, finance, health, leisure, housing, and environment. We distinguish between long-term and short- term effects. Next, we explain domain satisfactions and Subjective Well-Being by objectively measurable variables such as income. We estimate a model for the GS
We are grateful to M.J. Ellman, K. Gërxhani, W. Saris, and an anonymous referee for useful commen... more We are grateful to M.J. Ellman, K. Gërxhani, W. Saris, and an anonymous referee for useful comments. The usual disclaimers apply. We also like to thank M. Aldham-Breary for improving This paper is intended to shed light on the extent of poverty in the Russian Federation. We present estimates of poverty lines and poverty ratios derived from subjective questions used in a during data collection for a large household panel (RUSSET). We estimate poverty using a subjective approach, where the level of the poverty line is derived using the opinion of the individual, rich or poor, on poverty. This approach differs from the objective approach to poverty, which defines poverty according to the opinion of experts. Three subjective poverty lines are presented: one the Financial Satisfaction Poverty Line, two the Leyden Poverty Line, and three the Subjective Well-Being Poverty Line. The first two poverty lines are based on subjective questions regarding income and economic welfare while the las...
We analyze individual satisfaction with life as a whole and satisfaction with the personal financ... more We analyze individual satisfaction with life as a whole and satisfaction with the personal financial situation for Israeli citizens of Jewish and Arab descent. Our data set is the Israeli Social Survey (2006). We are especially interested in the impact of the religions Judaism, Islam and Christianity, where we are able to differentiate between individuals who vary in religiosity between secular and ultra-orthodox. We find a significant effect of religiosity on happiness. With respect to Jewish families it is most striking that the impact of family size on both life and financial satisfaction seems to vary with religiosity. This might be a reason for differentiation in family equivalence scales. For Arab families we did not find this effect. First-generation immigrants are less happy than secondgeneration immigrants, while there is no significant difference between second-generation families and native families. The effect of the Lebanon War is much less than expected.
† The authors would like to thank Rob Alessie for useful comments. The usual disclaimers apply. W... more † The authors would like to thank Rob Alessie for useful comments. The usual disclaimers apply. We would also like to thank the GSOEP group and their director Prof. G. Wagner for making the data Happiness has recently been studied by several economists, e.g., Di Tella et al. (2000), Frey and Stutzer (2000). This paper fits into this literature but takes into account that there are different aspects to life, e.g., health, financial situation, job. We call these aspects domains and each domain is evaluated by determining domain satisfaction. In this paper we ‘unfold ’ the general concept of happiness, whereby considerably composite of domain satisfactions. We postulate a simultaneous equation model where individual happiness is explained 'objective ' variables, and by individual subjective domain satisfactions with respect to job, finance, health, leisure, housing, and environment. We distinguish between long- and short- term effects. It is possible to explain domain satisfactions and happiness to a large extent using objectively measurable variables such as income. The model is estimated using ordered probit with individual random effects and fix time effects. We apply the model to find the income loss equivalent to loosing employment for a worker. Key words: happiness, satisfaction measurement, qualitative regressors, health satisfaction, job satisfaction. 2
In this paper, the concept of Income Satisfaction Inequality is operationalized on the basis of i... more In this paper, the concept of Income Satisfaction Inequality is operationalized on the basis of individual responses to an Income Satisfaction question posed in the German Socio-Economic Panel (GSOEP). Income satisfaction is the subjective analogue of the objective income concept and includes objective income inequality as a special case. The paper introduces a method to decompose Income Satisfaction Inequality according to the contributions from variables such as income, education, and the number of children. Given the panel structure of the data, inequality may be attributed partly to permanent individual circumstances and partly to transitory changes. The paper shows that by far the largest part of the satisfaction inequality has to be ascribed to unobserved heterogeneity. Distinguishing between a structural and an unexplained part of inequality we find that income explains the largest part of structural Income Satisfaction Inequality together with household membership; for non-w...
† The authors would like to thank Rob Alessie for useful comments. The usual disclaimers apply. W... more † The authors would like to thank Rob Alessie for useful comments. The usual disclaimers apply. We like to thank the GSOEP-group and their director Prof. G. Wagner for making the data In this paper we attempt to explain individual, ordinally comparable, satisfaction levels. We postulate a simultaneous equation model where general satisfaction is explained by exogenous shock and level variables, and by the values of the satisfactions with respect to six distinct endogenous domains of life. Taking into account that these satisfactions were categorically measured and allowing for individual effects, the model was estimated on six consecutive waves of the German Socio-Economic Panel. The results are statistically very significant and plausible. The main conclusions of this paper are: a) given the fact that we get stable significant and intuitively interpretable results, the assumption of interpersonal (ordinal) comparability of satisfactions cannot be rejected on the grounds that it leads to insignificant or implausible results; b) It is possible to explain satisfactions to a large
In this paper we evaluate the QALY loss, which may be assigned to the prevalence of specific chro... more In this paper we evaluate the QALY loss, which may be assigned to the prevalence of specific chronic illnesses and physical handicaps. The analysis is based on an individual self-rating health satisfaction question asked in the British Household Panel Survey data set. This question provides a natural cardinalization of health utility. Our method is a refinement of the method introduced by Instead, we suggest a more natural cardinalization, which does not exclude non-linearities.
* Contact author. Faculty of Economics and Econometrics and Tinbergen Institute, University of Am... more * Contact author. Faculty of Economics and Econometrics and Tinbergen Institute, University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam, The Netherlands. [email protected] ** Department of General Economics, Free University, De Boelelaan 1105, 1081 HV Amsterdam, The Netherlands. [email protected] *** SEO, Amsterdam Economics and Faculty of Economics and Econometrics, University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam, The Netherlands. Tinbergen Institute, Amsterdam, The Netherlands. [email protected]
SSRN Electronic Journal
In this paper, the concept of Income Satisfaction Inequality is operationalized on the basis of i... more In this paper, the concept of Income Satisfaction Inequality is operationalized on the basis of individual responses to an Income Satisfaction question posed in the German SocioEconomic Panel (GSOEP). Income satisfaction is the subjective analogue of the objective income concept and includes objective income inequality as a special case. The paper introduces a method to decompose Income Satisfaction Inequality according to the contributions from variables such as income, education, and the number of children. Given the panel structure of the data, inequality may be attributed partly to permanent individual circumstances and partly to transitory changes. The paper shows that by far the largest part of the satisfaction inequality has to be ascribed to unobserved heterogeneity. Distinguishing between a structural and an unexplained part of inequality we find that income explains the largest part of structural Income Satisfaction Inequality together with household membership; for non-working individuals, the age distribution is very relevant as well.
SSRN Electronic Journal
Inequality Aversion and Risk Attitudes Using self reported measures of life satisfaction and risk... more Inequality Aversion and Risk Attitudes Using self reported measures of life satisfaction and risk attitudes, we empirically test whether there is a relationship between individuals inequality and risk aversion. The empirical analysis uses the German SOEP household panel for the years 1997 to 2007 to conclude that the negative effect of inequality measured by the sample gini coefficient by year and federal state is larger for those individuals who report to be less willing to take risks. Nevertheless, the empirical results suggest that even though inequality and risk aversion are related, they are not the same thing. The paper shows that the relationship between risk attitudes and inequality aversion survives the inclusion of individual characteristics (i.e. income, education, and gender) that may be correlated with both risk attitudes and inequality aversion.
PodoPost
Op het moment dat ik dit schrijf is het buiten nat en koud. Continu wordt er in alle media gespro... more Op het moment dat ik dit schrijf is het buiten nat en koud. Continu wordt er in alle media gesproken over de klimaatverandering. Is het extreem warm dan wordt erover gesproken, is het een keer koud dan wordt er ook over gesproken. Het ene moment is het weer te droog, met als gevolg openbarstende grond, en vervolgens zie je de rivieren erg vol raken en overlopen van alle regenwater. Dan is de veroorzaker de CO²-uitstoot, vervolgens is het weer een teveel aan stikstof, dan krijgen de koeien weer de schuld. De lucht bestaat toch al voor 80% uit stikstof? Tenminste, dat hebben ze mij vroeger op school geleerd. Ik vind dat allemaal lastig te volgen hoor, en vraag me af of wij wel eerlijke en duidelijke informatie krijgen. Volgens mij draait het allemaal om de economie en geld.
Quantitative Approaches to Multidimensional Poverty Measurement, 2008
This paper addresses two key issues in modern policy-oriented poverty research. First, we recogni... more This paper addresses two key issues in modern policy-oriented poverty research. First, we recognize that poverty is an individual feeling and not an objective status. This leads to an operational definition of subjective poverty as being below a certain degree of satisfaction. Second, we distinguish several domains of life, and consequently, several types of poverty, each pertaining to a specific life domain. It is found that, although the chance on being poor in one domain enhances the chance to be poor in another domain, it is justified to see poverty as a multi-dimensional concept. Poverty 'with life as a whole' may be decomposed into poverty components with respect to life domains.
International Journal of Global Energy Issues, 2002
This article examines behavioural responses to changes in energy prices by surveying the magnitud... more This article examines behavioural responses to changes in energy prices by surveying the magnitude of energy price elasticities. Price elasticity estimates can be used to understand behavioural responses to changes in prices due to environmental taxes. A theoretical framework is presented followed by an overview of the range of price elasticity estimates for energy found in the literature. The empirical estimates are classified on the basis of a selection of characteristics. It is argued that presenting a range of price elasticities provides more information than a unique estimate. The findings suggest that environmental taxes can create a significant reduction in energy use.
In this paper we find an individual non-cognitive characteristic that generates heterogeneity on ... more In this paper we find an individual non-cognitive characteristic that generates heterogeneity on individuals' taste for equality. This is individuals' locus of control (LOC), a personality measure that defines individuals as externals or internals depending on individuals' perception about the role of external (e.g., luck and others) or internal (e.g., effort and own decisions) forces driving their lives. The empirical analysis shows that external individuals are more inequality averse than internal individuals. This relates to the idea that individuals' degree of tolerance towards inequality depends on the importance they assign to own effort or luck to determine individuals' outcomes. Even though policy making cannot affect individuals' personality and despite personality seems to be fairly time persistent, understanding the relationship between LOC and inequality aversion will help us assess the importance of fairness feelings on shaping preferences for equality. The empirical analysis uses the German SOEP, a large representative panel data set for Germany.
In contrast with many other European and OECD countries, Spain’s income inequality has decreased ... more In contrast with many other European and OECD countries, Spain’s income inequality has decreased over the last 30 years. Nevertheless, Spain is still among the most unequal countries in the EU15, as it started from a fairly disadvantaged situation. Spain’s inequality indices are typically larger than those of countries such as Denmark, Norway, Finland, Sweden, Belgium, the Netherlands, France, and Germany and many East European countries. The overall picture is fairly clear: since 1985, and with the exception of two recession episodes, Spain has seen a pronounced income inequality reduction. During these two periods of economic downturn inequality increases, but this only partly offsets the previous reduction. Notwithstanding this, the current deep economic recession may change the picture for the coming years. An important source of this income inequality reduction has been earnings compression, partly due to falling upper secondary and tertiary education premium. In addition, Span...
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Papers by A. Ferrer-i-carbonell