EconPapers    
Economics at your fingertips  
 

Are income poverty and perceptions of financial difficulties dynamically interrelated?

Sara Ayllón () and Alessio Fusco ()

Journal of Economic Psychology, 2017, vol. 61, issue C, 103-114

Abstract: An individual’s economic ill fare can be assessed both objectively, looking at one’s income with reference to a poverty line, or subjectively, on the basis of the individual’s perceived experience of financial difficulties. Although these are distinct perspectives, income poverty and perceptions of financial difficulties are likely to be interrelated. Low income (especially if it persists) is likely to negatively affect perceptions of financial difficulties and, as recently suggested by the behavioural economics literature, (past) subjective sentiment may in return influence individual’s income generating ability and poverty status. The aim of this paper is to determine the extent of these dynamic cross-effects between both processes. Using Luxembourg survey data, our main result highlights the existence of a feedback effect from past perceived financial difficulties on current income poverty suggesting that subjective perceptions can have objective effects on an individual’s behaviour and outcomes.

Keywords: Aspirations; Behavioural economics; Dynamic joint models; Feedback effects; Income poverty; Perceived financial difficulties; State dependence (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167487016302203
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Are income poverty and perceptions of financial difficulties dynamically interrelated? (2016) Downloads
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:eee:joepsy:v:61:y:2017:i:c:p:103-114

Access Statistics for this article

Journal of Economic Psychology is currently edited by G. Antonides and D. Read

More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-06-26
Handle: RePEc:eee:joepsy:v:61:y:2017:i:c:p:103-114