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The Influence of Preference Information on Equivalent Income

Author

Listed:
  • Bart Defloor

    (SHERPPA (Ghent University))

  • Elsy Verhofstadt

    (SHERPPA (Ghent University))

  • Luc Van Ootegem

    (SHERPPA (Ghent University)
    Research Institute for Work and Society (HIVA, KULeuven))

Abstract

Equivalent income (EI) has been proposed as an interesting measure for well-being. It summarizes the achievement in terms of different dimensions of well-being into one indicator while explicitly taking into account individual preferences over these dimensions. Acquiring the necessary information on these individual preferences over the dimensions of well-being is not an easy task, though. One way is to derive them from subjective well-being (SWB) information. The most often used SWB question is satisfaction with life. In this article we calculate EI based on preferences derived from three often used SWB questions: satisfaction with life, happiness and the extent to which individuals consider what they do in life as valuable. Then we analyse the profile of the worst off according to the measures. The results show that the achievements in terms of the dimensions of well-being matters more for the EI calculations than the preferences. When analyzing the worst off, it is shown that the profile of the individuals considered as badly off by each of the equivalent income measures differs.

Suggested Citation

  • Bart Defloor & Elsy Verhofstadt & Luc Van Ootegem, 2017. "The Influence of Preference Information on Equivalent Income," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(2), pages 489-507, March.
    • Handle: RePEc:spr:soinre:v:131:y:2017:i:2:d:10.1007_s11205-016-1261-1
    DOI: 10.1007/s11205-016-1261-1
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    Cited by:

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    2. Marko Ledic & Ivica Rubil, 2020. "Does going beyond income make a difference? Income vs. equivalent income in the EU over 2007-2011," Public Sector Economics, Institute of Public Finance, vol. 44(4), pages 423-462.

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