Inequality, income, and well-being

Koen Decancq, Marc Fleurbaey and Erik Schokkaert

No 2014018, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Individual well-being depends not only on income but also on other dimensions of life, such as health, the quality of social relations and of the environment, employment, and job satisfaction. In this paper we survey the economic literature on how to construct such overall measures of well-being. We distinguish three approaches: the capability (and functionings) approach, the use of subjective life satisfaction measures and the calculation of equivalent incomes. We discuss the normative assumptions underlying these three approaches, focusing on two issues: the degree to which individual preferences are respected and where in each approach the boundaries of individual responsibility are drawn. We compare the measurement of inequality in well-being with the use of multidimensional inequality measures. We illustrate the general theoretical issues in three domains of application: measuring the effects of household size and composition in the literature on equivalence scales, valuing publicly provided goods and services, and making international comparisons of well-being involving international PPP comparisons.

Date: 2014-06-11
New Economics Papers: this item is included in nep-hap and nep-ltv
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Citations: View citations in EconPapers (8)

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Working Paper: Inequality, income and well-being (2015)
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