Can welfare be measured with a preference-satisfaction index?

Willem van der Deijl*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Welfare in economics is generally conceived of in terms of the satisfaction of preferences, but a general, comparable index measure of welfare is generally not taken to be possible. In recent years, in response to the usage of measures of subjective well-being as indices of welfare in economics, a number of economists have started to develop measures of welfare based on preference-satisfaction. In order to evaluate the success of such measures, I formulate criteria of policy-relevance and theoretical success in the context of preference-satisfaction measures of welfare. I present a detailed case study of the methodological choices put forward in a prominent generalized proposal for measuring welfare through preferences recently published in the American Economic Review. I contrast this with an alternative welfare measure which also uses preferences to weight aspects of welfare: the ICECAP-A measure. I assess the methodology of both approaches in detail and argue that the two goals of a preference measure of welfare can only be satisfied at the expense of making a measure prohibitively costly.

Original languageEnglish
Pages (from-to)126-142
Number of pages17
JournalJournal of Economic Methodology
Volume25
Issue number2
DOIs
Publication statusPublished - 2018

Keywords

  • Welfare
  • utility
  • measurement
  • happiness
  • well-being
  • HAPPINESS
  • UTILITY
  • ECONOMICS
  • HEDONISM

Cite this

@article{ffa0bffc1a7645b99beaf652bbb229bb,
title = "Can welfare be measured with a preference-satisfaction index?",
abstract = "Welfare in economics is generally conceived of in terms of the satisfaction of preferences, but a general, comparable index measure of welfare is generally not taken to be possible. In recent years, in response to the usage of measures of subjective well-being as indices of welfare in economics, a number of economists have started to develop measures of welfare based on preference-satisfaction. In order to evaluate the success of such measures, I formulate criteria of policy-relevance and theoretical success in the context of preference-satisfaction measures of welfare. I present a detailed case study of the methodological choices put forward in a prominent generalized proposal for measuring welfare through preferences recently published in the American Economic Review. I contrast this with an alternative welfare measure which also uses preferences to weight aspects of welfare: the ICECAP-A measure. I assess the methodology of both approaches in detail and argue that the two goals of a preference measure of welfare can only be satisfied at the expense of making a measure prohibitively costly.",
keywords = "Welfare, utility, measurement, happiness, well-being, HAPPINESS, UTILITY, ECONOMICS, HEDONISM",
author = "{van der Deijl}, Willem",
year = "2018",
doi = "10.1080/1350178X.2017.1413586",
language = "English",
volume = "25",
pages = "126--142",
journal = "Journal of Economic Methodology",
issn = "1350-178X",
publisher = "ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD",
number = "2",

}

Can welfare be measured with a preference-satisfaction index? / van der Deijl, Willem.

In: Journal of Economic Methodology, Vol. 25, No. 2, 2018, p. 126-142.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Can welfare be measured with a preference-satisfaction index?

AU - van der Deijl, Willem

PY - 2018

Y1 - 2018

N2 - Welfare in economics is generally conceived of in terms of the satisfaction of preferences, but a general, comparable index measure of welfare is generally not taken to be possible. In recent years, in response to the usage of measures of subjective well-being as indices of welfare in economics, a number of economists have started to develop measures of welfare based on preference-satisfaction. In order to evaluate the success of such measures, I formulate criteria of policy-relevance and theoretical success in the context of preference-satisfaction measures of welfare. I present a detailed case study of the methodological choices put forward in a prominent generalized proposal for measuring welfare through preferences recently published in the American Economic Review. I contrast this with an alternative welfare measure which also uses preferences to weight aspects of welfare: the ICECAP-A measure. I assess the methodology of both approaches in detail and argue that the two goals of a preference measure of welfare can only be satisfied at the expense of making a measure prohibitively costly.

AB - Welfare in economics is generally conceived of in terms of the satisfaction of preferences, but a general, comparable index measure of welfare is generally not taken to be possible. In recent years, in response to the usage of measures of subjective well-being as indices of welfare in economics, a number of economists have started to develop measures of welfare based on preference-satisfaction. In order to evaluate the success of such measures, I formulate criteria of policy-relevance and theoretical success in the context of preference-satisfaction measures of welfare. I present a detailed case study of the methodological choices put forward in a prominent generalized proposal for measuring welfare through preferences recently published in the American Economic Review. I contrast this with an alternative welfare measure which also uses preferences to weight aspects of welfare: the ICECAP-A measure. I assess the methodology of both approaches in detail and argue that the two goals of a preference measure of welfare can only be satisfied at the expense of making a measure prohibitively costly.

KW - Welfare

KW - utility

KW - measurement

KW - happiness

KW - well-being

KW - HAPPINESS

KW - UTILITY

KW - ECONOMICS

KW - HEDONISM

U2 - 10.1080/1350178X.2017.1413586

DO - 10.1080/1350178X.2017.1413586

M3 - Article

VL - 25

SP - 126

EP - 142

JO - Journal of Economic Methodology

JF - Journal of Economic Methodology

SN - 1350-178X

IS - 2

ER -