Back to Bentham: should we? Large-scale comparison of decision versus experienced utility for income-leisure preferences

H. Xavier Jara, Olivier Bargain and Alpaslan Akay

No 2015-02, ISER Working Paper Series from Institute for Social and Economic Research

Abstract: Subjective well†being (SWB) is increasingly used as a way to measure individual well†being. Interpreted as “experienced utility†, it has been compared to “decision utility†using specific experiments (Kahneman et al., 1997) or stated preferences (Benjamin et al. 2012). We suggest here an original large†scale comparison between ordinal preferences elicited from SWB data and those inferred from actual choices (revealed preferences). Precisely, we focus on income†leisure preferences, closely associated to redistributive policies. We compare indifference curves consistent with income†leisure subjective satisfaction with those derived from actual labor supply choices, on the same panel of British households. Results show striking similarities between these measures on average, reflecting that overall, people’s decision are not inconsistent with SWB maximization. Yet, the shape of individual preferences differ across approaches when looking at specific subpopulations. We investigate these differences and test for potential explanatory channels, particularly the roles of constraints and of individual “errors†related to aspirations, expectations or focusing illusion. We draw implications of our results for welfare analysis and policy evaluation.

Date: 2015-02-09
New Economics Papers: this item is included in nep-hap and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published

Downloads: (external link)
https://www.iser.essex.ac.uk/wp-content/uploads/fi ... ers/iser/2015-02.pdf (application/pdf)

Related works:
Working Paper: Back To Bentham: Should We? LargeScale Comparison of Decision versus Experienced Utility for IncomeLeisure Preferences (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ese:iserwp:2015-02

Ordering information: This working paper can be ordered from
Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
https://www.iser.essex.ac.uk/publications/

Access Statistics for this paper

More papers in ISER Working Paper Series from Institute for Social and Economic Research Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK. Contact information at EDIRC.
Bibliographic data for series maintained by Jonathan Nears ().