Happiness, Equivalent Incomes and Respect for Individual Preferences

25 Pages Posted: 18 Jan 2016

See all articles by Koen Decancq

Koen Decancq

University of Antwerp; KU Leuven - Center for Economic Studies; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE); University of Mannheim - Mannheim Centre for European Social Research (MZES)

Marc Fleurbaey

Princeton University - Woodrow Wilson School of Public and International Affairs

Erik Schokkaert

Catholic University of Leuven (KUL)

Date Written: December 2015

Abstract

In this paper, we study interpersonal comparisons of wellbeing. We show that using subjective wellbeing (SWB) levels can be in conflict with individuals' judgments about their own lives. We propose therefore an alternative wellbeing measure in terms of equivalent incomes that respects individual preferences. We show how SWB surveys can be used to derive the ordinal information about preferences needed to calculate equivalent incomes. We illustrate our approach with Russian panel data (RLMS‐HSE) for the period 1995–2003 and compare it to standard wellbeing measures such as expenditures and SWB. We find that different groups are identified as worst off.

Suggested Citation

Decancq, Koen and Fleurbaey, Marc and Schokkaert, Erik, Happiness, Equivalent Incomes and Respect for Individual Preferences (December 2015). Economica, Vol. 82, pp. 1082-1106, 2015. Available at SSRN: https://ssrn.com/abstract=2716498 or http://dx.doi.org/10.1111/ecca.12152

Koen Decancq (Contact Author)

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

University of Mannheim - Mannheim Centre for European Social Research (MZES) ( email )

D-68131 Mannheim
Germany

Marc Fleurbaey

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Erik Schokkaert

Catholic University of Leuven (KUL) ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

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