A Stochastic Model for the Utility of Income
In this paper we propose a particular approach to measuring utility of income. To this end we develop a theoretical framework that restricts the class of admissible functional forms and distributions of the random components of the model. The theoretical approach is based on ideas and principles that are used in modern psychophysical research and theories of probabilistic choice.The empirical part of the paper is based on “Stated Preference” data (SPD). In the present context this means that individuals participating in a laboratory type of experiments are asked to rank order a set of hypothetical alternatives presented.
|Date of creation:||03 Oct 2003|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway|
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Fax: 22 85 50 35
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- Seidl, Christian, 1994. "How sensible is the Leyden individual welfare function of income?," European Economic Review, Elsevier, vol. 38(8), pages 1633-1659, October.
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