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Interpersonal comparisons by means of money metric utilities: why one should use the same reference prices for all

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  • Bart Capéau
  • André Decoster
  • Liebrecht De Sadeleer

Abstract

We show that using different reference prices for different individuals in money metrics of well–being leads to violations of several normative properties of interpersonal welfare comparisons that have become popular in the fairness literature. An empirical illustration for Belgian single adults available for the labour market in 2015 shows that the violation of these principles in the labour consumption context, is all but exceptional

Suggested Citation

  • Bart Capéau & André Decoster & Liebrecht De Sadeleer, 2019. "Interpersonal comparisons by means of money metric utilities: why one should use the same reference prices for all," Working Papers of Department of Economics, Leuven 636146, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:636146
    Note: paper number DPS 19.05
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    1. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521715348, January.
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    Keywords

    Money metric utility; well–being measurement; equivalent variation; labour supply;
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