The Connexion between Old and New Approaches to Financial Satisfaction

Bernard van Praag

No 04-053/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In this paper we compare the new satisfaction evaluation approach, developed inthe nineties by Oswald ,Clark , Blanchflower and others with the older incomeevaluation (IEQ) approach, developed by Van Praag and Kapteyn in theseventies of the previous century. We find that both approaches yield strikinglysimilar results with respect to financial satisfaction. The IEQ-approach yieldsadditional insights, but it is not well applicable to other life domains thanfinance. It is argued that the usual Probit specification implies a specificcardinalization and, consequently, is less ordinal than usually thought. It isshown that the Probit-approach may be replaced by three other equivalentspecifications that have some computational and intuitive advantages.

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

Keywords: Financial satisfaction; income evaluation; Probit-models; cardinal utility (search for similar items in EconPapers)
JEL-codes: C24 C25 D31 H31 I31 I39 (search for similar items in EconPapers)
Date: 2004-05-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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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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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20040053

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