Inequality, income, and well-being

Koen Decancq, Marc Fleurbaey, Erik Schokkaert

Research output: Chapter in Book/Report/Conference proceedingChapter

52 Scopus citations


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 survey the economic literature on how to construct such overall measures of well-being. We distinguish three approaches: the capability (and functionings) approach, the use of subjective life satisfaction measures, and the calculation of equivalent incomes. We discuss the normative assumptions underlying these three approaches, focusing on two issues: the degree to which individual preferences are respected and where in each approach the boundaries of individual responsibility are drawn. We compare the measurement of inequality in well-being with the use of multidimensional inequality measures. We illustrate the general theoretical issues in three domains of application: measuring the effects of household size and composition in the literature on equivalence scales, valuing publicly provided goods and services, and making international comparisons of well-being involving international purchasing power parity comparisons.

Original languageEnglish (US)
Title of host publicationHandbook of Income Distribution
PublisherElsevier B.V.
Number of pages74
StatePublished - 2015

Publication series

NameHandbook of Income Distribution
ISSN (Print)1574-0056

All Science Journal Classification (ASJC) codes

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics


  • Capability approach
  • Equivalence scales
  • Equivalent income
  • Life satisfaction
  • Multidimensional inequality
  • Publicly provided services
  • Purchasing power parities
  • Well-being


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