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Willingness-to-pay and the equivalence approach

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  • Marc Fleurbaey

Abstract

This paper describes the evaluation of individual situations in terms of equivalent incomes (or money-metric utilities) computed from ordinary income by adding or subtracting various terms of willingness-to-pay. It discusses the origin of the approach and its connection with social choice theory, fair allocation theory, and philosophical principles. It shows how this has been generalized into a broader ?equivalence approach?, and argues that the criticisms that have been raised against this methodology are not compelling. It also examines the challenges to be addressed for empirical applications of the approach.

Suggested Citation

  • Marc Fleurbaey, 2011. "Willingness-to-pay and the equivalence approach," Revue d'économie politique, Dalloz, vol. 121(1), pages 35-58.
    • Handle: RePEc:cai:repdal:redp_211_0035
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    Cited by:

    1. Yang, Lin, 2018. "Measuring well-being: a multidimensional index integrating subjective well-being and preferences," LSE Research Online Documents on Economics 87789, London School of Economics and Political Science, LSE Library.
    2. Marc Fleurbaey, 2012. "The importance of what people care about," Politics, Philosophy & Economics, , vol. 11(4), pages 415-447, November.
    3. Alain Babatoundé & Bart Capéau & Romain Houssa, 2023. "Welfare effects of indirect tax policies in West Africa," Working Papers of Department of Economics, Leuven 746845, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    4. Laurence Cannings & Craig Hutton & Kristine Nilsen & Alessandro Sorichetta, 2025. "“Where and Whom You Collect Weightings from Matters…” Capturing Wellbeing Priorities Within a Vulnerable Context: A Case Study of Volta Delta, Ghana," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 177(2), pages 863-908, March.
    5. Crispin H. V. Cooper, 2020. "Quantitative Models of Well-Being to Inform Policy: Problems and Opportunities," Sustainability, MDPI, vol. 12(8), pages 1-13, April.
    6. Marc Fleurbaey & Stéphane Luchini & Erik Schokkaert & Carine Van de Voorde, 2012. "Évaluation des politiques de santé : pour une prise en compte équitable des intérêts des populations," Économie et Statistique, Programme National Persée, vol. 455(1), pages 11-36.
    7. Harun ONDER & Pierre PESTIEAU & Gregory PONTHIERE, 2025. "Equivalent income versus equivalent lifetime: does the metric matter?," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 91(2), pages 210-239, June.
    8. John A. Weymark, 2017. "Conundrums for nonconsequentialists," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(2), pages 269-294, February.
    9. Islam, Nizamul & Colombino, Ugo, 2018. "The case for NIT+FT in Europe. An empirical optimal taxation exercise," Economic Modelling, Elsevier, vol. 75(C), pages 38-69.
    10. Canning, David, 2023. "Conducting Cost Benefit Analysis in Expected Utility Units Using Revealed Social Preferences," Working Papers 0722, University of Heidelberg, Department of Economics.
    11. Nicholas Rohde & Ross Guest, 2018. "Multidimensional Inequality Across Three Developed Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 576-591, September.
    12. Olivier Bargain & André Decoster & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2013. "Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 789-817, October.
    13. Lin Yang, 2017. "Measuring individual well-being: A multidimensional index integrating subjective well-being and preferences," CASE Papers /202, Centre for Analysis of Social Exclusion, LSE.
    14. Nizamul Islam & Ugo Colombino, 2018. "The case for negative income tax with flat tax in Europe. An empirical optimal taxation exercise," Working Papers 454, ECINEQ, Society for the Study of Economic Inequality.
    15. Yang, Lin, 2017. "Measuring individual well-being: A multidimensional index integrating subjective well-being and preferences," LSE Research Online Documents on Economics 103495, London School of Economics and Political Science, LSE Library.

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