When making choices we compare the expected utility of alternatives, at least when we try to choose rationally. Comparison is easier when the utility of different things can be expressed in a common unit. Economists use monetary value for this purpose. This unit is quite helpful for comparing goods and services that have a market price, such as houses and bicycles. It is less helpful in assessing the relative value of things like fresh air and true love, since these matters are not traded for money. For this reason economists sometimes try to estimate 'shadow prices'. This is of course a tricky business. Estimates are easily flawed by ideological preposition and like 'shadow cabinets' in British politics, proposed shadow prices often serve only to promulgate propaganda. In this context Clark and Oswald propose estimating shadow prices on the basis of observed effects on happiness. This idea has been advanced in the past, f.e. by VanPraag and Plug (1973), but now as the study of happiness matures, it becomes more practicable.

doi.org/10.1093/ije/31.6.1139, hdl.handle.net/1765/8750
International Journal of Epidemiology
Department of Sociology

Veenhoven, R. (2002). Commentary: The units of utility; Comment to Clarck, A.E. and Oswald, A.J. 'A simple statistical method for measuring howlife-events affect happiness'. International Journal of Epidemiology, 31(6), 1139–1144. doi:10.1093/ije/31.6.1139