'Fair' welfare comparisons with heterogeneous tastes : subjective versus revealed preferences / Alpaslan Akay (University of Gothenburg, IZA and LISER), Olivier B. Bargain (Aix-Marseille University, CNRS, EHESS and IZA), H. Xavier Jara (University of Essex and ISER) ; IZA Institute of Labor Economics
VerfasserAkay, Alpaslan In der Gemeinsamen Normdatei der DNB nachschlagen ; Bargain, Olivier In der Gemeinsamen Normdatei der DNB nachschlagen ; Jara, H. Xavier In der Gemeinsamen Normdatei der DNB nachschlagen
KörperschaftForschungsinstitut zur Zukunft der Arbeit In der Gemeinsamen Normdatei der DNB nachschlagen
ErschienenBonn, Germany : IZA Institute of Labor Economics, July 2017
Elektronische Ressource
Umfang1 Online-Ressource (43 Seiten) : Diagramme
SerieDiscussion paper ; no. 10908
URNurn:nbn:de:hbz:5:2-136038 Persistent Identifier (URN)
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'Fair' welfare comparisons with heterogeneous tastes [11.53 mb]
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Multidimensional welfare analysis has recently been revived by money-metric measures based on explicit fairness principles and the respect of individual preferences. To operationalize this approach, preference heterogeneity can be inferred from the observation of individual choices (revealed preferences) or from self-declared satisfaction following these choices (subjective well-being). We question whether using one or the other method makes a difference for welfare analysis based on income-leisure preferences. We estimate ordinal preferences that are either consistent with actual labor supply decisions or with incomeleisure satisfaction. For different ethical priors regarding work preferences, we compare the welfare rankings obtained with both methods. The correlation in welfare ranks is high in general and very high for the 60% of the population whose actual choices coincide with subjective well-being maximization. For the rest, most of the discrepancies seem to be explained by labor market constraints among the low skilled and underemployment among low-educated single mothers. Importantly from a Rawlsian perspective, the identification of the worst o$ depends on ethical views regarding responsibility for work preferences and the extent to which actual choices are constrained on the labor market.