The Connexion between Old and New Approaches to Financial Satisfaction

Bernard van Praag

No 1162, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we compare the new satisfaction evaluation approach, developed in the nineties by Oswald, Clark, Blanchflower and others with the older income evaluation (IEQ) approach, developed by Van Praag and Kapteyn in the seventies of the previous century. We find that both approaches yield strikingly similar results with respect to financial satisfaction. The IEQ- approach yields additional insights, but it is not well applicable to other life domains than finance. It is argued that the usual Probit specification implies a specific cardinalization and, consequently, is less ordinal than usually thought. It is shown that the Probit-approach may be replaced by three other equivalent specifications that have some computational and intuitive advantages.

Keywords: cardinal utility; financial satisfaction; income evaluation; Probit-models (search for similar items in EconPapers)
JEL-codes: C24 C25 D31 H31 I31 I39 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2004-05
New Economics Papers: this item is included in nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published - published in: Luigino Bruni and Pierluigi Porta (eds.), Economics and Happiness. Framing the Analysis, Oxford University Press, 2005

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Related works:
Working Paper: The Connexion Between Old and New Approaches to Financial Satisfaction (2004)
Working Paper: The Connexion between Old and New Approaches to Financial Satisfaction (2004)
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