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Positional concerns can be measured in several ways: using the distance between individual income and mean or median income of the reference group; rank of the observation in the group; the marginal degree of positionality, etc. Following Alpizar et al (2005) marginal degree of positionality using the additive comparison utility function is computed as follows:

𝛾 =𝑌𝐴−𝑌𝐵

𝑌̂𝐴−𝑌̂𝐵 ; (3.3)

studies in the literature (see Carlsson, 2010 for the advantages and disadvantages of using survey experimental approaches to test positional concerns).

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Where YA is individual hypothetical monthly income in society (village) A and 𝑌̂𝐴 is average income of other youth in society (Village) A. YB is individual monthly income in society (village) B, and 𝑌̂𝐵 is the average income of other youth in village B. Fathers’ marginal degree of positional concern refers to positional concerns for father of youth members. The same is true with mothers and household heads.

The experiment begins offering youth to choose between society A, where their monthly income is lower than the average monthly income of the reference group (960 birr vs 1080 birr), and society B1, where their monthly income is higher than the average monthly income of the reference group but lower than their income in society A. Exact replicas are offered to fathers and mothers, except that fathers and mothers make their choices with respect to the youth under consideration (see appendix 3A.1). I assume that society A is a fixed alternative. If the individual chooses society A, the sessionends since the individual has revealed their realized marginal degree of positionality. In this case, the realized degree of positionality is lower than the implied degree of positionality. If the individual chooses B1, then they are asked to choose between society A and society B2, where their income is further lower than in B1 but still higher than the income level in the reference group. Since the choice is always against society A, the degree of positional concern increases as we go from society Bi to society Bi+1. The process ends if an individual chooses society A or has reached the last choice set, i.e. B6, in this setting. Note that the reference group is also held constant throughout the process to make the process simple and easy for the respondent. An illustrative example for youth scenario is presented as follows (detailed instructions for the three groups are presented in appendix A3.1):

Imagine that you can choose to live in one of two different societies, society A and society B. Your monthly income and the average monthly income of people differ between the two societies. Except for the income differences, other things, like living expenses, are the same in the two societies. For each society that I will consider, I will tell you the amount of your monthly income and the average monthly income of the group. Then, I will ask you to choose which society you would like to live in. Let me illustrate this choice by the following example. In this example, I will just name the group of people “other youth.”

Society Your own income Average income of other youth:

birr/month

Society A 800 900

Society B 770 600

Which society do you choose to live in?

In this example, the youth earns an income of 800 birr per month in society A while the average income of other youth in the same society is 900 birr per month. In society B, the youth income is 770 birr per month while the average income of other youth in that society is 600 birr per month. The youth monthly income is 30 birr more in society A than in society B. In society A, the youth earn 100 birr less than the average income of other youth in the society; while in society B the youth get 170 birr more. Given these differences, the youth is asked to choose either to live in Society A or B. When the subject (youth) chooses Society A, I computed the marginal degree of positional concern for each youth within an upper and lower bound. Using equation (3.3), the marginal degree

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of positional concern is 0.1. In this example, if the youth chooses society (village) A, then it implies that the youth has a marginal degree of positionality lower than 0.1(𝛾 ≤ 0.10). Through a repeated choice between the two set of choices, I are able to obtain information about their marginal degree of positional concerns, at least within an upper and lower bound. In the same manner, if a father and mother make the same choice, the marginal degree of positionality of a father and mother towards the youth under consideration is 0.10. Repeated choices between the two societies have been presented in a subsequent order for each youth, father, and mother. The lowest possible income choice in our experimental setting is about 720 birr. To avoid design effect related to income levels across the age cohorts (youth, father, and mother) in the choice sets, I decided to use the same income levels. Hence, the implicit degree of positionality is the same across the groups (father, mother and youth), changing between 0.1 and 0.6.

Subjective well-being

The use of well-being assessment questions such as life satisfaction has widely been used since 1930’s by scholars such as Likert (Likert, 1932). Literature suggests various proxies of measuring subjective well-being (SWB) or life satisfaction, which are in general based on ‘’happiness’’, ‘’life satisfaction’ or ‘’mental health’’ (Frey and Stutzer, 2002; Akay et al., 2013). Our data include both standard life satisfaction measures, referred here as subjective well-being, SWB, which allows subjects to rate their level of life satisfaction on a scale from 1 to 9 (1 indicating the worst possible life and 9 the best possible life), and work satisfaction measures of the general Edenred-Ipsos Barometer20 that uses scores from 1 to 5 (1 strongly disagree and 5 strongly agree).

In computing SWB index from the first approach (referred here as option 1), I classify the measures into 5 ordinal categories, ensuring adequate variability at the same time reducing empty cells. In order to obtain a measure of SWB from the latter approach (referred here as option 2), I added the scores of the different items related to work satisfaction of individuals and derive a SWB index ranging from 12 to 71. I use this index as a proxy for the latent experienced individual utility, hence the low levels of the scores indicating low well-being while high scores indicating a relatively higher or better well- being. The subjective well-being measure of youth (option 1), a proxy variable to quantify subjective well-being of youth, runs as follows:

Say, we would like to ask you some questions about how you see your circumstances in comparison to others. There are nine steps on this ladder. Suppose the very top (the 9th step) represents the best possible life for you and the bottom represents the worst possible life for

20 _{Edenred-Ipsos Barometer can be categorized into three pillars: the Environmental, Appreciation and Emotion} (EDENRED-IPSOS, 2016). This alternative measure was originally designed to assess well-being of individuals at work. Environment refers to the equipment, work-life balance, a clear idea of what is expected, etc. Appreciation

refers to respect shown by parents, friends, skills, etc. Emotion includes enjoying the work, interest in the job,

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you. Where on the ladder do you personally feel you stand [at the present time, three years ago,

and one year ago]? [Show the picture of ladder (RECORD STEP NUMBER 01-09)]

The answer to this question takes discrete values from 1 to 9. I then convert these scales into an ordinal scale of 5, with 5 indicating the highest level of well-being and 1 indicating the lowest level of well- being. I refer to these ordinal measures as subjective well-being (SWB). This approach has been widely used in the psychology literature and recently frequently used in economics literature (Easterlin, 1974, 1999; Ferrer-i-Carbonell and Frijters, 2004; Ferrer-i-Carbonell, 2005; Akay et al., 2012). Ferrer-i- Carbonell (2002) indicates that the use of this approach is based on three important assumptions: i) willingness and the ability of individuals to answer well-being questions; ii) that SWB is linked with the economic concept of welfare, and iii) the possibility of interpersonal comparability at an ordinal level. For instance, an individual whose SWB is say 5 is better off (happier) than one with a SWB of 3.

The second option of measuring SWB (option 2) is constructed from the sum of 17 different questions of Edenred-Ipsos Barometer. Each individual was asked 17 questions rated on a scale ranging from 1 (‘’strongly disagree’’) to 5 (‘’strongly agree’’) (11 questions), and 0 (‘’no’’) to 1 (‘’yes’’) (6 questions); hence the lowest score is 11 and the highest is 71 (see Appendix Table A3.2 for the list of questions used). I sum up the responses of these 17 questions and categorized into 5 ordinal scales. The scores are arranged in order so that the highest scores indicating higher well-being. For instance, one of the 17 questions addressed to respondents run in the following manner:

You feel proud to show your friends or other visitors where you live. You are proud of the work you are doing. The responses would be from 1 strongly disagree to 5 strongly agree.

As a practice, also in the literature, I interpret the measure as a proxy for the latent utility (Clark et al., 2008; Akay et al., 2012). Our empirical analysis reported below is mainly based on the self-reported measure of well-being computed using option 1, and use the alternative approach (option 2) as a robustness check (results reported in Appendix Table A3.4). The distribution of the SWB for youth sample are reported in figure 3.1 and the resulting reports of summary statistics of selected variables for the whole sample used in the analysis is presented in Table 3.7. In terms of gender, SWB is higher for male youth than female youth (figure 3.2).

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Figure 3.1: Distribution of youth subjective well-being by gender. Note that SWB is based on life satisfaction asking subjects to rate their life satisfaction on 1 to 9 scales (1 indicating the worst possible life and 9 the best possible life).

In the following section, I present the descriptive results.