Perceived income adequacy among older adults: Issues of conceptualization and measurement, with an analysis of data

Several scholars have argued that because of problems associated with the use of a uniform 'objective' standard in assessments of well-being, more attention should be given to persons' own judgments of well-being. This article develops a conceptual mapping of processes involved in judgments of income adequacy and then tests a number of derived hypotheses with data from a probability sample of older adults. The results indicate that relative standing as well as health status, household size, and level of income have independent effects on judgments of income adequacy; that income is endogenous to the judgment process; that effects of demographic variables and labor supply are sensitive to that endogeneity; and that as older adults age, they tend to discount needs relative to available income. Even under conditions of poverty, there is a strong bias toward positive judgments of adequacy.