Empirical Uses of Subjective Measures of Well-Being: Household Cost Functions and Equivalence Scales

We describe a simple method to estimate household cost func-tions and family equivalence scales. It is an alternative to stan-dard methods as it does not assume strong postulates about util-ity maximization nor any functionally specified model equations. The data requirements are extremely modest. We assume inter-Van Praag is a professor of economics at the Econometric Institute, Erasmus University