Putting Subjective Well-Being to Use for Ex-Ante Policy Evaluation

KU Leuven, Department of Economics, DISCUSSION PAPER SERIES DPS16.24 OCTOBER 2016

38 Pages Posted: 25 Nov 2016

See all articles by Holguer X. Jara

Holguer X. Jara

KU Leuven - Center for Economic Studies

Erik Schokkaert

Catholic University of Leuven (KUL)

Date Written: October 2016

Abstract

Most studies using microsimulation techniques have considered the effect of potential reforms, but only regarding income distribution. However, it has become increasingly recognised, both at the academic and political level, that focusing purely on income provides a limited picture of social progress. We illustrate how ex-ante policy evaluation can be performed in terms of richer concepts of individual well-being, such as subjective life satisfaction and equivalent incomes. Our analysis makes use of EUROMOD, the EU-wide tax-benefit microsimulation model, along with 2013 EU-SILC data for Sweden, which for the first time provides information on subjective well-being. Our results show that the effect of potential reforms varies widely depending on the well-being concept used in the evaluation. We discuss the normative questions that are raised by this finding.

Keywords: disposable income, satisfaction, equivalent income, microsimulation

JEL Classification: D60, H23, I31

Suggested Citation

Jara, Holguer X. and Schokkaert, Erik, Putting Subjective Well-Being to Use for Ex-Ante Policy Evaluation (October 2016). KU Leuven, Department of Economics, DISCUSSION PAPER SERIES DPS16.24 OCTOBER 2016, Available at SSRN: https://ssrn.com/abstract=2874376 or http://dx.doi.org/10.2139/ssrn.2874376

Holguer X. Jara (Contact Author)

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Erik Schokkaert

Catholic University of Leuven (KUL) ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

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