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Willingness-to-pay and the Equivalent Approach

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  • Marc Fleurbaey

Abstract

This paper describes the evaluation of individual situations in terms of equivalent incomes 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 and philosophical principles. It also examines the challenges to be addressed for empirical applications of the approach.

Suggested Citation

  • Marc Fleurbaey, 2008. "Willingness-to-pay and the Equivalent Approach," OPHI Working Papers 25, Queen Elizabeth House, University of Oxford.
  • Handle: RePEc:qeh:ophiwp:ophiwp025
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    File URL: https://ophi.org.uk/working-paper-number-25/
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    References listed on IDEAS

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    2. Marc Fleurbaey & Guillaume Gaulier, 2009. "International Comparisons of Living Standards by Equivalent Incomes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 597-624, September.
    3. Blackorby, Charles & Donaldson, David, 1988. "Money metric utility: A harmless normalization?," Journal of Economic Theory, Elsevier, vol. 46(1), pages 120-129, October.
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    6. Maniquet, Francois, 1998. "An equal right solution to the compensation-responsibility dilemma," Mathematical Social Sciences, Elsevier, vol. 35(2), pages 185-202, March.
    7. Maniquet, Francois & Sprumont, Yves, 2005. "Welfare egalitarianism in non-rival environments," Journal of Economic Theory, Elsevier, vol. 120(2), pages 155-174, February.
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    11. Marc Fleurbaey & François Maniquet, 2006. "Fair Income Tax," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 55-83.
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    14. Slesnick, Daniel T, 1991. "Aggregate Deadweight Loss and Money Metric Social Welfare," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 123-146, February.
    15. Amartya Sen, 1999. "The Possibility of Social Choice," American Economic Review, American Economic Association, vol. 89(3), pages 349-378, June.
    16. Sen, Amartya, 1979. "The Welfare Basis of Real Income Comparisons: A Survey," Journal of Economic Literature, American Economic Association, vol. 17(1), pages 1-45, March.
    17. Marc Fleurbaey, 2005. "Health, wealth and fairness," Post-Print hal-00247025, HAL.
    18. Charles Blackorby & David Donaldson, 1990. "A Review Article: The Case against the Use of the Sum of Compensating Variations in Cost-Benefit Analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 471-494, August.
    19. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-1289, December.
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    21. Marc Fleurbaey, 2005. "Health, Wealth, and Fairness," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(2), pages 253-284, May.
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