Wellbeing Inequality and Preference Heterogeneity

29 Pages Posted: 28 Mar 2017

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: April 2017

Abstract

Standard measures of multidimensional inequality (implicitly) assume common preferences for all individuals, and hence are not sensitive to preference heterogeneity among members of society. In this paper, we measure the inequality of the distribution of equivalent incomes, which is a preference‐sensitive multidimensional wellbeing measure. To quantify the contribution of preference heterogeneity to wellbeing inequality, we use a decomposition method that calculates wellbeing inequality in different counterfactual distributions. We focus on four sources of wellbeing inequality: the correlation between outcomes and preferences, the preference heterogeneity, the correlation between the outcome dimensions, and the inequality within each of the outcome dimensions. We find that preference heterogeneity accounts for a considerable part of overall wellbeing inequality in Russia for the period 1995–2005.

Suggested Citation

Decancq, Koen and Fleurbaey, Marc and Schokkaert, Erik, Wellbeing Inequality and Preference Heterogeneity (April 2017). Economica, Vol. 84, Issue 334, pp. 210-238, 2017. Available at SSRN: https://ssrn.com/abstract=2941849 or http://dx.doi.org/10.1111/ecca.12231

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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