Public Sector Economics, Vol. 44 No. 4, 2020.
Original scientific paper
https://doi.org/10.3326/pse.44.4.1
Does going beyond income make a difference? Income vs. equivalent income in the EU over 2007-2011
Marko Ledić
orcid.org/0000-0002-3320-0741
; Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia
Ivica Rubil
orcid.org/0000-0002-9111-7313
; The Institute of Economics, Zagreb, Croatia
Abstract
In this paper, we study whether taking into account non-income dimensions along with income while measuring individual well-being matters for cross-country welfare comparisons. We focus on the 27 EU member states over the period 2007-2011, using data from the European Quality of Life Survey. Individual well-being is measured by equivalent income, which is equal to the actual income minus the monetary value of suffering from not having the best achievements in non-income dimensions. Cross-country comparisons of these statistics and their growth rates show that going “beyond income” makes a substantial difference. In particular, we find that when social welfare is measured by an index sensitive to both mean well-being and its inequality, leaving out non-income dimensions, especially health, from well-being measurement, would leave unexplained more than half of the cross-country variation in social welfare. Taking non-income dimensions into account affects more the part of social welfare that is inequality-sensitive than the one that is mean sensitive.
Keywords
well-being; multi-dimensional; equivalent income; social welfare; non-income dimensions
Hrčak ID:
247497
URI
Publication date:
1.12.2020.
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