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Beyond Averages: Inequality‐Sensitive Welfare Comparisons Across the Atlantic

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  • Shaun Da Costa

Abstract

Prior studies assessing welfare across countries have utilized measures that combine country‐level outcomes in income and life expectancy. However, this perspective remains blind to the fact that two countries may have the same life expectancy and/or average income but very different underlying distributions. In this paper, I introduce a new preference‐based measure of social welfare that is sensitive to within‐country disparities in lifespan and income. To illustrate the measure, I compare welfare levels and trends for the EU and US using different sets of preference parameters. The results reveal that welfare levels and trends are highly sensitive to several normative assumptions, particularly the degree of inequality aversion. Moreover, I find a close connection between the degree of inequality aversion and the assumed level of rank‐order correlation between income and lifespan. Overall, the results highlight the need for measures of welfare that are explicit about different value judgments.

Suggested Citation

  • Shaun Da Costa, 2026. "Beyond Averages: Inequality‐Sensitive Welfare Comparisons Across the Atlantic," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 72(2), May.
    • Handle: RePEc:bla:revinw:v:72:y:2026:i:2:n:e70071
    DOI: 10.1111/roiw.70071
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