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The estimation of welfare levels of a cardinal utility function

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  • Buyze, Jeannine
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    Abstract

    In order to measure an individual's welfare function of income, WFI [Van Praag (1968, 1971)], the individual is confronted with various welfare levels and asked to associate income levels with them. The welfare levels are given as verbal qualifications like ‘good’, ‘sufficient’, ‘bad’, etc. It is assumed that these verbal qualifications correspond to intervals of equal length of the range of the WFI. Here we want to test this assumption. A first principal component model is applied. The intervals of the range of the WFI associated with the verbal qualifications are estimated and a test of their equality is performed.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Economic Review.

    Volume (Year): 17 (1982)
    Issue (Month): 3 ()
    Pages: 325-332

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    Handle: RePEc:eee:eecrev:v:17:y:1982:i:3:p:325-332

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    Web page: http://www.elsevier.com/locate/eer

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    1. Buyze, J. & Wansbeek, T.J. & Kapteyn, A.J., 1979. "Maximizing or satisficing?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-361903, Tilburg University.
    2. Kapteyn, Arie & Van Herwaarden, Floor G., 1980. "Interdependent welfare functions and optimal income distribution," Journal of Public Economics, Elsevier, vol. 14(3), pages 375-397, December.
    3. Laffargue, Jean-Pierre, 1977. "Nonlinear models of analysis of variance," Economics Papers from University Paris Dauphine 123456789/13005, Paris Dauphine University.
    4. Kapteyn, Arie & Wansbeek, Tom & Buyze, Jeannine, 1980. "The dynamics of preference formation," Journal of Economic Behavior & Organization, Elsevier, vol. 1(2), pages 123-157, June.
    5. Laffargue, Jean-Pierre, 1977. "Nonlinear models of analysis of variance," Journal of Econometrics, Elsevier, vol. 5(3), pages 347-363, May.
    6. Kapteyn, A.J., 1977. "A theory of preference formation," Open Access publications from Tilburg University urn:nbn:nl:ui:12-364727, Tilburg University.
    7. Van Praag, Bernard M. S. & Kapteyn, Arie, 1973. "Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands," European Economic Review, Elsevier, vol. 4(1), pages 33-62, April.
    8. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 11(3), pages 337-369.
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    Cited by:
    1. Dagsvik, John K. & Strom, Steinar & Jia, Zhiyang, 2006. "Utility of income as a random function: Behavioral characterization and empirical evidence," Mathematical Social Sciences, Elsevier, vol. 51(1), pages 23-57, January.
    2. Yoram Amiel, 1998. "The subjective approach to the measurement of income inequality," LSE Research Online Documents on Economics 6595, London School of Economics and Political Science, LSE Library.
    3. Wim Groot & Henri�tte Maassen van den Brink & Erik Plug, 2004. "Money for health: the equivalent variation of cardiovascular diseases," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 859-872.
    4. Groot, Wim & Maassen van den Brink, Henriette & Plug, Erik, 2002. "Money for Health: The Compensating Variation of Cardiovascular Diseases," IZA Discussion Papers 653, Institute for the Study of Labor (IZA).
    5. Yoram Amiel, 1998. "The Subjective Approach to the Measurement of Income Inequality (published in Handbook of Income Inequality Measurement, J Silber (ed), Kluwer Academic Publishers (1999), pp.227-241)," STICERD - Distributional Analysis Research Programme Papers 38, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.

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