Empirical comparison of the shape of welfare functions

This study brings together data from 8 samples to compare empirically 12 alternative functional forms of welfare functions to the lognormal welfare function proposed by Van Praag (1968). The comparison comprises 11 different wordings in surveys of, in total, about 14,000 respondents. The lognormal f...

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Bibliographic Details
Published inEuropean economic review Vol. 15; no. 3; pp. 261 - 286
Main Authors van Herwaarden, Floor G., Kapteyn, Arie
Format Journal Article
LanguageEnglish
Published Amsterdam, etc Elsevier B.V 01.03.1981
North Holland Publishing Company, etc
Elsevier Sequoia S.A
Subjects
Functions
Income
Measurement
Statistical analysis
Welfare
Welfare economics
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Summary:This study brings together data from 8 samples to compare empirically 12 alternative functional forms of welfare functions to the lognormal welfare function proposed by Van Praag (1968). The comparison comprises 11 different wordings in surveys of, in total, about 14,000 respondents. The lognormal function outperforms 11 of the alternative functions in terms of the residual variance criterion, while the logarithm performs slightly better than the lognormal. On the basis of theoretical and practical considerations it is suggested that the lognormal function may be maintained, although further research into the measurement procedure is needed.
ISSN:0014-2921
1873-572X
DOI:10.1016/S0014-2921(81)80002-5