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How do we value our income from which we save?

Author

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  • Liberda, Barbara
  • Peczkowski, Marek
  • Gucwa-Lesny, Ewa

Abstract

In this paper we analyze the relationship between the perception of income as satisfying household needs and saving rate of this household. Using the multinomial logit regression function we measure the probability of a household to fall into one of the groups categorized by the subjective perception of income in relation to the current household disposable income. The variable specified for the valuation of income is income perception, defined as a class of observed disposable income located on the scale of the subjectively satisfying income. Factors determining the perception of income are: gender and education of the household head, family characteristics, source of income and place of residence. The analysis of relations between the income perception and the household saving rates shows that the perception of income affects both the household observed and predicted saving rates. The research is based on the Household Budget Surveys data for Poland in 2008.

Suggested Citation

  • Liberda, Barbara & Peczkowski, Marek & Gucwa-Lesny, Ewa, 2012. "How do we value our income from which we save?," MPRA Paper 52529, University Library of Munich, Germany, revised 2012.
    • Handle: RePEc:pra:mprapa:52529
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    References listed on IDEAS

    as
    1. Barbara Liberda, 1999. "Household Saving in Poland," CASE Network Studies and Analyses 0187, CASE-Center for Social and Economic Research.
    2. Easterlin, Richard A., 2006. "Life cycle happiness and its sources: Intersections of psychology, economics, and demography," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 463-482, August.
    3. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    4. Zofia Barbara Liberda, 2007. "Income Preferences and Household Savings," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 9, pages 19-30.
    5. van Praag, Bernard M. S., 1991. "Ordinal and cardinal utility : An integration of the two dimensions of the welfare concept," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 69-89, October.
    6. Stanovnik, Tine, 1992. "Perception of poverty and income satisfaction : An empirical analysis of Slovene households," Journal of Economic Psychology, Elsevier, vol. 13(1), pages 57-69, March.
    7. Kahneman, Daniel, 2002. "Maps of Bounded Rationality," Nobel Prize in Economics documents 2002-4, Nobel Prize Committee.
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    Cited by:

    1. Hanna Dudek & Joanna Landmesser, 2012. "Income satisfaction and relative deprivation," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 13(2), pages 321-334, June.

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    More about this item

    Keywords

    household; income; needs; valuation; saving; probability;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D19 - Microeconomics - - Household Behavior - - - Other
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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