CONCLUSION
Egalitarian thinkers are usually concerned about the distribution of well-being. Individual well-being depends not only on income but also on other dimensions of life, such as health, the quality of social relations and of the environment, employment, and job satisfaction.
In this chapter we have surveyed the economic literature on how to construct such overall measures of well-being. We distinguished three approaches: the capability (and functionings) approach, the use of subjective life satisfaction measures, and the calculation of equivalent incomes. We argued that the choice of measure ultimately is a normative issue, and we discussed the normative assumptions underlying the measurement of individual well-being, focusing on two issues: the degree to which individual preferences are respected and where in each approach the boundaries of individual responsibility are drawn. The three approaches take a different stance on these issues. We also compared the measurement of inequality in well-being with the use of multidimensional inequality measures. The latter only fit in a perfectionist perspective, completely neglecting interpersonal preference differences.In most of the applied work on inequality measurement the ambition is more limited. One keeps focusing on resource-based measures, which are then extended to include other considerations: household size and composition (and other needs) in the literature on equivalence scales, the value of publicly provided goods and services, or differences in prices in the contect of international PPP comparisons. In each of these cases one usually does not aim at constructing an overall measure of well-being. One neglects (respectively) the direct effects of family relations on well-being, the attainment of functionings as a result of the public provision of goods and services, and the effect of international preference heterogeneity.
In all these three domains one focuses on situation rather than welfare comparisons. However, the most common approaches are not really satisfactory, even from this more limited perspective, and the proposals to improve on these existing measures (the construction of indifference scales, the use of subjective satisfaction information, the introduction of willingness-to-pay and differences in needs in the context of public service provision, the introduction of preference differences in international comparisons) move the approaches in the direction of the construction of more global well-being measures and use methods that have also been explored and developed for the latter purpose. In fact, in some cases, the informational requirements become similar. Analyzing the exact relationship between “extended (or corrected) incomes” and overall measures of well-being is a fruitful area for further research.ACKNOWLEDGMENT
We are grateful to the editors andJohn Roemer, Tim Smeeding, Tom Trimpeneers, Aki Tsuchiya, Gerlinde Verbist, and Frederic Vermeulen for helpful comments and suggestions on an earlier version.
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