You are here
Perception and Retrospection: The dynamic consistency of responses to survey questions on wellbeing
Implementation of broad approaches to welfare analysis usually entails the use of ‘subjective’ welfare indicators. We analyse British Household Panel Survey data on financial wellbeing to determine whether reported current and retrospective perceptions are consistent with each other and with the existence of a common underlying wellbeing concept. We allow for adjustment of perceptions in a vector ARMA model for panel data, with dependent variables observed ordinally and find that current perceptions exhibit slow adjustment to changing circumstances and retrospective assessments of past wellbeing are heavily contaminated by current circumstances, causing significant bias in measures of the level and change in welfare.
Steve Pudney is Director of the ESRC Research Centre on Micro-Social Change at ISER, University of Essex. He works on a wide range of microeconometric applications. His current applied interests include: survey-based measurement (and mis-measurement) of health and wellbeing; the effectiveness of the system of social care and disability benefits for the older population; and the design of policy on illicit drugs and crime.