Brown Bag Seminar: Marion Collewet

Measuring income-leisure preferences using hypothetical questions

Marion Collewet, CORE

Using hypothetical survey questions, we obtain direct measures of income-leisure preferences at the individual level. First, we ask respondents to indicate which different combinations of working time and wage they would find equally satisfying. The indifference curves elicited in this way are very curved around the respondents’ starting point, hinting at status quo bias and yielding small elasticities of substitution. In addition, we measure income effects by asking respondents how much they would still work after a positive income shock. The income effect appears for most individuals larger than the substitution effect, which results in a negative average uncompensated wage elasticity of labour supply. This elasticity is, however, more positive for partnered women and younger individuals.