Estimating the Income Elasticity of Marginal Utility: A Study Using South Korean Household Survey Data

Young Jun Chun, Jeong Hwan Lee and Deokwoo Nam
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Young Jun Chun: Hanyang University
Jeong Hwan Lee: Hanyang University
Deokwoo Nam: Hanyang University

Korean Economic Review, 2025, vol. 41, 87-110

Abstract: In this study, we estimate the elasticity of the marginal utility of income using nationally representative household survey data from South Korea, following the direct measurement approach of Layard et al. (2008). Our findings suggest that the income elasticity of marginal utility for the broader population is 1.49 and remains stable over time. Moreover, we explore potential heterogeneity in the income elasticity of marginal utility among individuals. Statistically significant differences in this elasticity are observed across subgroups defined by various demographic and socioeconomic characteristics, including age, marital status, employment status, health status, educational attainment, and net asset positions.

Keywords: Marginal Utility of Income; Subjective Well-being Measure; Korea Welfare Panel Study (search for similar items in EconPapers)
JEL-codes: D6 H21 I31 (search for similar items in EconPapers)
Date: 2025
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