A Measure of Welfare Based on Permanent Income Hypothesis: An Application on Italian Households Budgets

Riccardo Massari ()
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Riccardo Massari: University "La Sapienza", Rome

Giornale degli Economisti, 2005, vol. 64, issue 1, 55-92

Abstract: The measurement of the actual household welfare is possibly the main problem in welfare analysis. Since welfare is not directly observable, researchers have to find a proxy to measure it. The aim of this work is to find a measure of welfare based on cross-sectional data. The measure proposed is a linear combination of observable indicators. Using data from the Bank of Italy SHIW, this paper provides some evidence that, under assumptions that are not very restrictive, this measure could properly depict the actual ranking of households in terms of their economic status.

Keywords: living standard; factor analysis; kernel density; welfare measurement (search for similar items in EconPapers)
JEL-codes: C14 C31 I32 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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