Beyond GDP: Is there a Law of one Shadow Price?

Publicado en

  • European Economic Review

Resumen

  • This paper builds a welfare measure encompassing household disposable income, unemployment and longevity, which are valued either from life satisfaction data (“subjective shadow prices”) or from calibrated utility functions (“model-based shadow prices”). The two different sets of shadow prices are shown to be broadly consistent once a number of conditions are fulfilled: i) running life satisfaction regressions at the country level rather than at the individual level to reduce the downward bias on the income variable due to measurement errors; (ii) valuing the unemployment risk in a state-contingent framework rather than under the veil of ignorance; (iii) disentangling relative risk aversion parameters for unemployment and vital risks; (iv) calibrating the utility function on adult lifespan rather than life expectancy at birth.

fecha de publicación

  • 2017

Líneas de investigación

  • Beyond GDP
  • Shadow Price
  • Value of Statistical Life
  • Welfare

Identificador de objeto digital (DOI)

  • https://doi.org/10.1016/j.euroecorev.2017.09.001

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Última página

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Volumen

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Issue

  • C