Testing the homogeneous marginal utility of income assumption
نویسندگان
چکیده
منابع مشابه
The marginal utility of income
In normative public economics it is crucial to know how fast the marginal utility of income declines as income increases. One needs this parameter for cost-benefit analysis, for optimal taxation and for the (Atkinson) measurement of inequality. We estimate this parameter using four large cross-sectional surveys of subjective happiness and two panel surveys. Altogether, the data cover over 50 co...
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In most applied cost–benefit analyses, individual willingness to pay (WTP) is aggregated without using explicit welfare weights. This can be justified by postulating a utilitarian social welfare function along with the assumption of equal marginal utility of income for all individuals. However, since marginal utility is a cardinal concept, there is no generally accepted way to verify the plausi...
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[T]he income and happiness relationship is . . . curvilinear . . . with a decreasing marginal utility for higher levels of income . . . . (Diener, Sandvik, Seidlitz, and Diener, 1993, 204; cf. also Diener and Biswas-Diener, 2002, 119) [W]e not only see a clear positive relationship [between happiness and GNP per capita], but also a curvilinear pattern; which suggest that wealth is subject to a ...
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The assumption of linearity is tested using five statistical tests for the US and the Canadian unemployment rates. An AR(p) model was used to remove any linear structure from the series. Strong evidence in favour of non−linearity was found in the case of Canada. The result for the US is not so clear cut. The author would like to thank Chung−Ming Kuan, David Chappell, Chris Martin and Costas Mil...
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The identification of average causal effects of a treatment in observational studies is typically based either on the unconfoundedness assumption (exogeneity of the treatment) or on the availability of an instrument. When available, instruments may also be used to test for the unconfoundedness assumption. In this paper, we present a set of assumptions on an instrumental variable which allows us...
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ژورنال
عنوان ژورنال: Econometric Reviews
سال: 2016
ISSN: 0747-4938,1532-4168
DOI: 10.1080/07474938.2016.1222235