Can welfare be measured with a preference-satisfaction index?

Willem van der Deijl*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

1 Citation (Scopus)

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

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