Can welfare be measured with a preference-satisfaction index?
Journal of Economic Methodology p. 1- 17
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.
|happiness, measurement, utility, Welfare, well-being|
|Journal of Economic Methodology|
|Organisation||Erasmus School of Philosophy|
van der Deijl, W.J.A. (2017). Can welfare be measured with a preference-satisfaction index?. Journal of Economic Methodology, 1–17. doi:10.1080/1350178X.2017.1413586