How Reliable and Consistent are Subjective Measures of Welfare in Europe and Central Asia? Evidence from the Second Life in Transition Survey

32 Pages Posted: 20 Apr 2016

See all articles by Alexandru Cojocaru

Alexandru Cojocaru

World Bank

Mame Fatou Diagne

Université Gaston Berger de Saint-Louis - GERSEG; World Bank

Date Written: February 1, 2013

Abstract

This paper analyzes the reliability and consistency of subjective well-being measures. Using the Life in Transition Survey, which was administered in 34 countries of Europe and Central Asia in 2006 and 2010, the paper evaluates subjective well-being measures (satisfaction with life and subjective relative income position) against objective measures of welfare based on consumption and assets. It uses the different formulations of life satisfaction in the survey to test robustness to alternative framing and scaling. It also explores within-household differences in subjective well-being assessments. The analysis finds that subjective relative income is weakly correlated with household relative welfare position as measured by consumption or assets. Life satisfaction, by contrast, is highly correlated with objective and subjective measures of household welfare. It generally reflects cross-country differences in average consumption, assets, or per capita gross domestic product, although Central Asian countries report much higher life satisfaction levels than their incomes would suggest. Two alternative measures of life satisfaction are highly correlated and the correspondence between verbal and numeric scales is strong within a country or groupings of similar countries. Within households, subjective assessments of relative income are roughly consistent but measurement error is correlated with individual characteristics (gender and age of respondents), which could cause systematic biases in the analysis.

Keywords: Access to Finance, Economic Theory & Research, Rural Poverty Reduction, Investment and Investment Climate, Inequality

Suggested Citation

Cojocaru, Alexandru and Diagne, Mame Fatou, How Reliable and Consistent are Subjective Measures of Welfare in Europe and Central Asia? Evidence from the Second Life in Transition Survey (February 1, 2013). World Bank Policy Research Working Paper No. 6359, Available at SSRN: https://ssrn.com/abstract=2217338

Alexandru Cojocaru (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Mame Fatou Diagne

Université Gaston Berger de Saint-Louis - GERSEG ( email )

Saint Louis
Senegal

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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