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Are Americans Really Less Happy With Their Incomes?
Arie Kapteyn1, James P Smith, Arie van Soest
1RAND.
The Review of Income and Wealth
|September 3, 2013
Summary
International comparisons of subjective well-being are biased by response scales. Adjusting for scale differences using anchoring vignettes reveals identical income satisfaction distributions in the Netherlands and US, correcting under-estimated income effects.
Area of Science:
- Economics
- Psychology
- Sociology
Background:
- International comparisons of subjective well-being face biases from incomparable response scales.
- Self-reported satisfaction with income is a key indicator often affected by these biases.
Purpose of the Study:
- To address response scale incomparability in international well-being research.
- To compare income satisfaction between the Netherlands and the US using anchoring vignettes.
Main Methods:
- Utilized anchoring vignettes to adjust for differences in response scales.
- Analyzed self-reported income satisfaction data from the Netherlands and the US.
Main Results:
- Raw data showed Americans less satisfied with income than Dutch citizens.
- After vignette-based adjustment, income satisfaction distributions were virtually identical between countries.
- The cross-sectional effect of income on satisfaction was significantly underestimated, particularly in the US, without scale adjustment.
Conclusions:
- Anchoring vignettes effectively resolve response scale biases in cross-country well-being comparisons.
- The perceived difference in income satisfaction between the US and Netherlands is an artifact of differing response scales.
- Accurate estimation of income's effect on satisfaction requires accounting for cross-country scale variations.
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