Abstract
The standard practice to predict economic behaviour has been to infer decision processes from the business cycle. Current decisions depend on the individual expectation of future variables including stock market returns, job loss, earning and social security benefit. Recently, several studies have looked at identifying how the effects of (subjective) perception affect the economic security of household well-being. After reviewing some preliminary concepts in this area, we implement a statistical model to analyse individual choices. We discuss properties and check their usefulness and consistency by means of data related to the Survey of Household Income and Wealth. An analysis of this model helps us understand individual uncertainty and how perception evolves over the life cycle conditioned by education and happiness. Some final remarks conclude the paper.
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Since the early 1990’s, economists have increasingly undertaken to elicit from survey respondents probabilistic expectations of significant personal events. Respondents are able to formulate and express subjective probabilities with reasonable care. Probabilistic elicitation has been recommended as long as 30 years ago [23].
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Microdata, documentation and publications can be downloaded from www.bancaditalia.itstatistiche/indcamp/bilfait
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Following analysis involves the log of income.
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Economists have used the terms “happiness” and “life satisfaction” interchangeably as measures of subjective well-being [12].
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When data are collected as part of a complex sample survey, it is difficult to analytically produce approximately unbiased and design-consistent estimates of variance. Generally, the variances of survey statistics are inappropriate and usually too small. Thus, a class of techniques called replication method provides a general method of estimating variances for the types of complex sample designs and weighting procedures usually performed in empirical contexts.
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Among the analysed covariates we quote: infoinc (family income); indincome (total individual income); wealthfam (family net wealth); realatt (family real assets); consume and saving of family.
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For the second approach we refer to Table 1.
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Acknowledgements
Authors thank CFEPSR, Portici, for the availability of structures. This work has been supported by a MIUR grant (code 2008WKHJPK-PRIN2008) for the project: “Modelli per variabili latenti basati su dati ordinali: metodi statistici ed evidenze empiriche” within the Research Unit of University of Naples Federico II (CUP number E61J10000020001).
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Iannario, M., Piccolo, D. (2012). Investigating and modelling the perception of economic security in the Survey of Household Income and Wealth. In: Perna, C., Sibillo, M. (eds) Mathematical and Statistical Methods for Actuarial Sciences and Finance. Springer, Milano. https://doi.org/10.1007/978-88-470-2342-0_28
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DOI: https://doi.org/10.1007/978-88-470-2342-0_28
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