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- Akay, Alpaslan, 1975, et al.
(author)
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Experienced versus decision utility: large-scale comparison for income-leisure preferences
- 2023
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In: Scandinavian Journal of Economics. - 0347-0520. ; 125:4, s. 823-859
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Journal article (peer-reviewed)abstract
- Subjective well-being (SWB) data are increasingly used to perform welfare analysis. Interpreted as "experienced utility", it has recently been compared to "decision utility" using small-scale experiments most often based on stated preferences. We transpose this comparison to the framework of non-experimental and large-scale data commonly used for policy analysis, focusing on the income-leisure domain where redistributive policies operate. Using the British Household Panel Survey, we suggest a "deviation" measure, which is simply the difference between actual working hours and SWB-maximizing hours. We show that about three-quarters of individuals make decisions that are not inconsistent with maximizing their SWB. We discuss the potential channels that explain the lack of optimization when deviations are significantly large. We find proxies for a number of individual and external constraints, and show that constraints alone can explain more than half of the deviations. In our context, deviations partly reflect the inability of the revealed preference approach to account for labor market rigidities, so the actual and SWB-maximizing hours should be used in a complementary manner. The suggested approach based on our deviation metric could help identify labor market frictions.
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| 2. |
- Akay, Alpaslan, 1975, et al.
(author)
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Remittances and relative concerns in rural China
- 2016
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In: China Economic Review. - : Elsevier BV. - 1043-951X. ; 37, s. 191-207
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Journal article (peer-reviewed)abstract
- The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of subjective well-being functions to simultaneously explore relative concerns with respect to income and remittances. Our results show that although rural households experience substantial welfare loss due to income comparisons, they gain well-being by comparing their remittances with those received by their reference group. In other words, we find evidence of a "status effect" with respect to income and of a "signal effect" of similar magnitude with respect to remittances. This finding is robust to various specifications, alternative reference group definitions, controls for the endogeneity of remittances and selective migration, as well as the use of migrants' net contribution to household income.
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