Wellbeing Inequality and Preference Heterogeneity

Koen Decancq, Marc Fleurbaey, Erik Schokkaert
2017 Economica  
Standard measures of multidimensional inequality (implicitly) assume common preferences for all individuals and, hence, are not sensitive to preference heterogeneity among the members of society. In this paper, we measure the inequality of the distribution of equivalent incomes, which is a preference-sensitive multidimensional well-being measure. To quantify the contribution of preference heterogeneity to well-being inequality, we use a decomposition method that calculates well-being inequality
more » ... in different counterfactual distributions. We focus on four sources of well-being inequality: the correlation between outcomes and preferences, the preference heterogeneity, the correlation between the outcome dimensions, and the inequality within each of the outcome dimensions. We nd that preference heterogeneity accounts for a considerable part of overall well-being inequality in Russia for the period of 1995 to 2005.
doi:10.1111/ecca.12231 fatcat:odhgftdglzbv5caq7ggae6wr4m