# Happiness Quantified: A Satisfaction Calculus Approach

By Bernard Van Praag; Ada Ferrer-I-Carbonell | Go to book overview

Subjective Inequalities-Generalized Approach

In the previous chapter we introduced the concept of a subjective income inequality. We replaced income in the usual inequality definition by its subjective counterpart FS, financial satisfaction. That gives us an income concept which is corrected for all intervening variables like age, family size, etc., and we define subjective income inequality in terms of inequality in FS. In Chapter 2 we saw that financial satisfaction may be quantified by taking conditional expectations

of FS, given that it is found to be within the ith interval of the financial-satisfaction module. This expectation may be taken in the ordinal POLS variant or the cardinal COLS variant. In Chapter 13 we saw that var(FS) under one assumption is equal to the variance under the other assumption except for a multiplicative factor. The same held for the breakdowns we derived.

Now we can pose the question whether this subjective inequality concept can be generalized to other domains like, for example, health and job satisfaction. It is obvious that there are large differences between individuals on these aspects as well. However, in the literature we do not find successful approaches. There are two problems which are, in our opinion, responsible for this lack of literature. First, how to measure health or job satisfaction in an objective way, as we use income to measure income inequality. It is obvious that such a basic variable is hard to find for those domains. Hence, it is impossible to measure objective health inequality as we can income inequality. In fact, we saw that income as such is also a rather meaningless variable, if we have in mind the mental state of satisfaction with income. This is because of the intervening variables for which nominal income has to be corrected. However, with respect to income we can assume a much closer link between nominal income and the ensuing satisfaction than between any objective health characteristic and health satisfaction. The second problem which makes health essentially different from income is that health is not transferable from one individual to another. We can think of a distribution of health, but it is

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Happiness Quantified: A Satisfaction Calculus Approach

• A Satisfaction Calculus Approach iii
• Contents vii
• Introduction 1
• Analysis of Income Satisfaction 15
• Domain Satisfactions 44
• Aggregation of Satisfactions 77
• Political Satisfaction 96
• Males, Females, and Households 114
• Impact of Past and Future on Satisfaction 136
• Influence of the Reference Group on Norms 158
• Health and Subjective Well-Being 177
• Effects of Climate on Welfare and Well-Being 205
• Compensations for Aircraft Noise Nuisance 219
• Taxation and Well-Being 239
• Subjective Income Inequalities 263
• Subjective Inequalitiesgeneralized Approach 281
• Poverty 291
• Epilogue 318
• References 323
• Index 333
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