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Subjective Poverty and Reference-Dependence: Income over Time, Aspirations and Reference Groups

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  • Carolina Castilla

Abstract

How a person assesses the wellbeing derived from income is often determined as much by its contrast with a reference point as by the level of income itself. In this paper, I use a household survey from Mexico to examine how subjective poverty assessments not only depend on the absolute level of income, but on how it compares to three reference points: the income of a reference group, the level of income that the individual aspired to have accomplished by the current stage of her life, and the income she had 3 years ago.

Suggested Citation

  • Carolina Castilla, 2010. "Subjective Poverty and Reference-Dependence: Income over Time, Aspirations and Reference Groups," WIDER Working Paper Series wp-2010-076, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2010-076
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    References listed on IDEAS

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    Cited by:

    1. Giuseppina Guagnano & Elisabetta Santarelli & Isabella Santini, 2016. "Can Social Capital Affect Subjective Poverty in Europe? An Empirical Analysis Based on a Generalized Ordered Logit Model," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(2), pages 881-907, September.
    2. Markus Jäntti & Ravi Kanbur & Milla Nyyssölä & Jukka Pirttilä, 2014. "Poverty and Welfare Measurement on the Basis of Prospect Theory," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 182-205, March.
    3. Ravallion, Martin & Himelein, Kristen & Beegle, Kathleen, 2013. "Can subjective questions on economic welfare be trusted ? evidence for three developing countries," Policy Research Working Paper Series 6726, The World Bank.
    4. Zsoka Koczan, 2022. "Perceptions of economic well‐being in the Western Balkans," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(4), pages 845-867, October.
    5. Ravallion, Martin, 2012. "Poor, or just feeling poor ? on using subjective data in measuring poverty," Policy Research Working Paper Series 5968, The World Bank.
    6. Filandri, Marianna & Pasqua, Silvia & Struffolino, Emanuela, 2020. "Being Working Poor or Feeling Working Poor? The Role of Work Intensity and Job Stability for Subjective Poverty," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 147(3), pages 781-803.
    7. Giuseppina Guagnano & Elisabetta Santarelli & Isabella Santini, "undated". "Subjective poverty in Europe: the role of household socioeconomic characteristics and social capital," Working Papers 113/13, Sapienza University of Rome, Metodi e Modelli per l'Economia, il Territorio e la Finanza MEMOTEF.
    8. Chersoni, Giulia & DellaValle, Nives & Fontana, Magda, 2022. "Modelling thermal insulation investment choice in the EU via a behaviourally informed agent-based model," Energy Policy, Elsevier, vol. 163(C).
    9. Martin Ravallion & Kristen Himelein & Kathleen Beegle, 2016. "Can Subjective Questions on Economic Welfare Be Trusted?," Economic Development and Cultural Change, University of Chicago Press, vol. 64(4), pages 697-726.
    10. Zsoka Koczan, 2016. "Being Poor, Feeling Poorer: Inequality, Poverty and Poverty Perceptions in the Western Balkans," IMF Working Papers 2016/031, International Monetary Fund.
    11. Solava Ibrahim, 2011. "Poverty, aspirations and wellbeing: afraid to aspire and unable to reach a better life – voices from Egypt," Global Development Institute Working Paper Series 14111, GDI, The University of Manchester.

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