Empirical comparison of the shape of welfare functions

Herwaarden, Floor G. Van; Kapteyn, Arie

doi:10.1016/0165-1765(79)90074-0

Cited by 33 publications

(10 citation statements)

References 6 publications

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“…It is interesting to note that in the experimental psychology literature the same assumption is also advocated [21]. On theoretical and empirical grounds the relationship between the six answers and welfare values is approximated by a lognormal distribution function [22,23]. Utility is written as…”

Section: Leyden Welfarementioning

confidence: 99%

Money for health: the equivalent variation of cardiovascular diseases

2004

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This paper introduces a new method to calculate the extent to which individuals are willing to trade money for improvements in their health status. An individual welfare function of income (WFI) is applied to calculate the equivalent income variation of health impairments. We believe that this approach avoids various drawbacks of alternative willingness-to-pay methods. The WFI is used to calculate the equivalent variation of cardiovascular diseases. It is found that for a 25 year old male the equivalent variation of a heart disease ranges from 114,000 euro to 380,000 euro depending on the welfare level. This is about 10,000 euro - 30,000 euro for an additional life year. The equivalent variation declines with age and is about the same for men and women. The estimates further vary by discount rate chosen. The estimates of the equivalent variation are generally higher than the money spent on most heart-related medical interventions per QALY. The cost-benefit analysis shows that for most interventions the value of the health benefits exceeds the costs. Heart transplants seem to be too costly and only beneficial if patients are young.

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Section: Leyden Welfarementioning

confidence: 99%

Money for health: the equivalent variation of cardiovascular diseases

2004

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“…For various tests of Van Praag's hypothesis we refer to Van Herwaarden and Kapteyn (1981) and Buyze (1982). Examples of WFIs have been drawn in Figure 1.…”

Section: The Utility Conceptmentioning

confidence: 99%

The Relativity of Utility: Evidence from Panel Data

Stadt¹,

Kapteyn²,

Geer³

1985

The Review of Economics and Statistics

Self Cite

273

105

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“…distribution function, see van Praag (1968van Praag ( , 1971 and Seidl (1994) for more details. Van Herwaarden and Kapteyn (1981) reported the outcome of tests on 13 different functional form specifications, which implied that a logarithmic utility function gave a better fit than a log-normal utility function.…”

Section: The Measurement Of Utility and The Link To Psychophysics: A mentioning

confidence: 99%

“…carried out large scale surveys, see for instance van Praag (1968van Praag ( , 1971van Praag ( , 1991van Praag ( ,1994, van Herwaarden, Kapteyn and van Praag (1977), van Herwaarden and Kapteyn (1981), Kapteyn and Wansbeck (1985).…”

Section: The Measurement Of Utility and The Link To Psychophysics: A mentioning

confidence: 99%

Utility of income as a random function: Behavioral characterization and empirical evidence

Dagsvik

Strøm

Jia

2006

Mathematical Social Sciences

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The paper proposes a particular approach to model the utility of income. We develop a theoretical framework that restricts the class of admissible functional forms and distributions of the random components of the model. The theoretical approach is based on theories of probabilistic choice and ideas that are used in modern psychophysical research. From our theoretical framework, we obtain the empirical model and the corresponding likelihood function. The empirical analysis is based on a "Stated Preference" survey. The model fits the data quite well. Finally, we discuss the concept of cardinality and the implications for consumer demand relations.

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Empirical comparison of the shape of welfare functions

Cited by 33 publications

References 6 publications

Money for health: the equivalent variation of cardiovascular diseases

Money for health: the equivalent variation of cardiovascular diseases

The Relativity of Utility: Evidence from Panel Data

Utility of income as a random function: Behavioral characterization and empirical evidence

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