Income Satisfaction Inequality and its Causes

Ada Ferrer-i-Carbonell and Bernard van Praag

No 02-014/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In this paper, the concept of Income Satisfaction Inequality is operationalized on the basis of individual responses to an Income Satisfaction question posed in the German Socio-Economic Panel (GSOEP). Income satisfaction is the subjective analogue of the objective income concept and includes objective income inequality as a special case. The paper introduces a method to decompose Income Satisfaction Inequality according to the contributions from variables such as income, education, and the number of children. Given the panel structure of the data, inequality may be attributed partly to permanent individual circumstances and partly to transitory changes. The paper shows that permanent income explains the largest part of Income Satisfaction Inequality; for non-working individuals, the age distribution is very relevant as well. Additionally, other variables such as number of adults, education, and having a partner explain most of the remaining Income Satisfaction Inequality.

This discussion paper has been published in 'Journal of Economic Inequality', 2003, 1(2), 107-27.

Keywords: Equivalent Income; Financial Satisfaction; Income Satisfaction; Inequality; Variance Decomposition; Welfare (search for similar items in EconPapers)
JEL-codes: D63 I32 (search for similar items in EconPapers)
Date: 2002-02-25
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://papers.tinbergen.nl/02014.pdf (application/pdf)

Related works:
Journal Article: Income Satisfaction Inequality and its Causes (2003)
Working Paper: Income Satisfaction Inequality and Its Causes (2003)
Working Paper: Income Satisfaction Inequality and its Causes (2003)
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:tin:wpaper:20020014

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().