Does the choice of well-being measure matter empirically? An illustration with German data
(2014) , 41 pages
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- Abstract
- We discuss and compare five measures of individual well-being, namely income, an objective composite well-being index, a measure of subjective well-being, equivalent income, and a well-being measure based on the von Neumann-Morgenstern utilities of the individuals. After examining the information requirements of these measures, we illustrate their implementation using data from the German Socio-Economic Panel (SOEP) for 2010. We find sizeable differences in the characteristics of the individuals identified as worst off according to the different well-being measures. Less than 1% of the individuals belong to the bottom decile according to all five measures. Moreover, the measures lead to considerably different well-being rankings of the individuals. These findings highlight the importance of the choice of well-being measure for policy making.
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Citations
Decancq, K., & Neumann, D. (2014). Does the choice of well-being measure matter empirically? An illustration with German data (CORE Discussion Papers 2014/50). https://hdl.handle.net/2078.5/194593