Munich Personal RePEc Archive

Subjective well-being approach for testing money illusion: Evidence using data from Social Weather Stations

Beja, Edsel Jr. (2015): Subjective well-being approach for testing money illusion: Evidence using data from Social Weather Stations.

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Abstract

This paper tests money illusion using measures for subjective well-being, nominal income, and price. It tests the hypothesis that there is no money illusion when proportional changes in both nominal income and price do not bring about a change in subjective well-being. The study uses food poverty data from Social Weather Stations as proxy measure for nominal income and food CPI inflation from the Philippine Statistics Authority as proxy measure for price. The findings suggest no money illusion in general. More specifically, the findings provide conclusive evidence of no money illusion for the food-poor but not for the food-nonpoor.

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