Consumer welfare beyond GDP

Inageneralconsumptionspacewhereagentsmaydifferintheirpreferences,endowments and prices, this paper builds a theory of consumer welfare on axioms reflecting the ethics of equality of opportunity: unequal budgets create welfare-relevant inequalities but heterogeneous preferences do not. When combined with an appropriate cross-economy robustness condition, these axioms single out a consumer welfare measure. Like aggregate consumption in national accounts, this measure sums up individual expenditure functions. Unlike national accounts, these functions are evaluated at a common price vector for all individuals. I show that standard measures of cost of living, standards of living, and purchasing power parity can be modified to reflect welfare as equality of opportunity without additional data.