Happiness, equivalent income and respect for individual preferences

In this paper, we study interpersonal comparisons of well-being. We show that using subjective well-being (SWB) levels can be in conflict with individuals' judgments about their own lives. We propose therefore an alternative metric of well-being in terms of equivalent incomes that does respect individual preferences. We show how SWB surveys can be used to derive the ordinal information about preferences that is needed to calculate these equivalent incomes. We illustrate our approach with panel data from the Russia Longitudinal Monitoring Survey (RLMS-HSE) for the period 1995-2003 and we compare the results for equivalent income with the results for other metrics of well-being such as expenditures and SWB.We find that different metrics identify different groups as the worst-off.status: publishe