The Marginal Utility of Income
We examine whether these estimates could be biased upwards if true utility is convex with respect to reported happiness
In normative public economics it is crucial to know how fast the marginal utility of income declines as income increases
The data cover over 50 countries and time periods between 1972 and 2005
In each of the six very different surveys, using a number of assumptions, we are able to estimate the elasticity of marginal utility with respect to income
The results are very similar for subgroups in the population. We examine whether these estimates could be biased upwards if true utility is convex with respect to reported happiness
We find some evidence of such bias, but it is small - yielding a new estimated elasticity of 1.24 for the combined sample
Need more features? Save interactive summary cards to your Scholarcy Library.