Interpersonal Comparisons by Means of Money Metric Utilities
Why One Should Use the Same Reference Prices for All
Keywords:
money metric utility, wee-being measurement, equivalent variation, labour supplyAbstract
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 show that the violation of these principles in the labour consumption context, is all but exceptional.
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