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Computation of Equivalent Incomes and Social Welfare for EU and Non-EU Countries

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  • Ida Petrillo

Abstract

Individual well-being depends not only on monetary income but is affected by various non-income dimensions of human life. While this is now broadly acknowledged, a unanimous way to measure such multidimensional well-being does not exist. In this article we examine the various approaches that have been proposed in this vein in welfare economics, by highlighting their strengths and weaknesses, and devote particular attention to the equivalent income. We use this indicator to compute individual well-being and social welfare for all the European Union (EU) and some non-EU countries with the data from the 3rd wave of the European Quality of Life Survey referred to the period 2011–2012. Our analysis shows that, whether we adopt a utilitarian or rank-dependent representation of social preferences, the ranking of countries based on their equivalent incomes is substantially different from that based on monetary incomes.

Suggested Citation

  • Ida Petrillo, 2018. "Computation of Equivalent Incomes and Social Welfare for EU and Non-EU Countries," CESifo Economic Studies, CESifo Group, vol. 64(3), pages 396-425.
    • Handle: RePEc:oup:cesifo:v:64:y:2018:i:3:p:396-425.
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    Cited by:

    1. Giampaolo Arachi & Michele G Giuranno & Paola Profeta, 2018. "Introduction to the Special Issue ‘Inequality and Public Policies’, CESifo Economic Studies 2018," CESifo Economic Studies, CESifo Group, vol. 64(3), pages 339-344.
    2. Marko Ledić & Ivica Rubil, 2021. "Beyond Wage Gap, Towards Job Quality Gap: The Role of Inter-Group Differences in Wages, Non-Wage Job Dimensions, and Preferences," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(2), pages 523-561, June.

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    More about this item

    Keywords

    welfare economics; inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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