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Measurement of Income with Time Use with Applications to Hedonic Indicators of Happiness and Misery

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Abstract

The present paper examines several issues involved in expanding national economic accounts and quantitative social indicators to include the "consumption" of time. The first part examines this question in the context of the standard national economic accounts. It derives equilibrium conditions for consumer behavior with market and non-market consumption along with intrinsic values of time in different activities. Using a standard index-number approach, it shows that the growth of real income can be approximated by a weighted average of productivity growth rates in market and non-market productivity and that the valuation of hours drops out of the formula. The second part of the paper examines the role of quantitative social indicators using the approach of hedonic psychology to value time in different activities. It concludes that hedonic measures do not meet the standards for a interpersonally cardinal variable that are required to construct a meaningful quantitative social indicator.

Suggested Citation

  • William D. Nordhaus, 2009. "Measurement of Income with Time Use with Applications to Hedonic Indicators of Happiness and Misery," Cowles Foundation Discussion Papers 1705, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:1705
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    File URL: http://cowles.yale.edu/sites/default/files/files/pub/d17/d1705.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Mankiw’s Political Philosophy
      by Agent Continuum in Agent Continuum on 2010-03-29 22:35:40

    More about this item

    Keywords

    Time use; Hedonic measures; National accounts; Index numbers;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D1 - Microeconomics - - Household Behavior
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

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