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Estimating the Income Elasticity of Marginal Utility: A Study Using South Korean Household Survey Data

Author

Listed:
  • Young Jun Chun

    (Hanyang University)

  • Jeong Hwan Lee

    (Hanyang University)

  • Deokwoo Nam

    (Hanyang University)

Abstract

In this study, we estimate the elasticity of the marginal utility of income using nationally representative household survey data from South Korea, following the direct measurement approach of Layard et al. (2008). Our findings suggest that the income elasticity of marginal utility for the broader population is 1.49 and remains stable over time. Moreover, we explore potential heterogeneity in the income elasticity of marginal utility among individuals. Statistically significant differences in this elasticity are observed across subgroups defined by various demographic and socioeconomic characteristics, including age, marital status, employment status, health status, educational attainment, and net asset positions.

Suggested Citation

  • Young Jun Chun & Jeong Hwan Lee & Deokwoo Nam, 2025. "Estimating the Income Elasticity of Marginal Utility: A Study Using South Korean Household Survey Data," Korean Economic Review, Korean Economic Association, vol. 41, pages 87-110.
    • Handle: RePEc:kea:keappr:ker-20250101-41-1-03
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    More about this item

    Keywords

    Marginal Utility of Income; Subjective Well-being Measure; Korea Welfare Panel Study;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D6 - Microeconomics - - Welfare Economics
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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