Skip to main content

Putting measures of individual well-being to use for ex-ante policy evaluation


Most studies using microsimulation techniques have considered the effect of potential reforms on the income distribution. However, it has become increasingly recognized, both at the academic and political level, that focusing purely on income provides a limited picture of social progress. We illustrate how ex-ante policy evaluation can be performed in terms of richer concepts of individual well-being, such as subjective life satisfaction and equivalent incomes. Our analysis makes use of EUROMOD, the EU-wide tax-benefit microsimulation model, along with 2013 EU-SILC data for Sweden, which for the first time provides information on life satisfaction. Our results show that the effect of potential reforms varies widely depending on the well-being concept used in the evaluation. We discuss the normative questions that are raised by this finding.


  1. Aaberge, R., Brandolini, A.: Multidimensional poverty and inequality. In: Atkinson, A., Bourguignon, F. (eds.). Handbook of Income Distribution, vol. 2A, pp. 141–216. Elsevier, New York (2015)

  2. Atkinson, A.: Multidimensional deprivation: contrasting social welfare and counting approaches. J. Econ. Inequal. 1, 51–65 (2003)

    Article  Google Scholar 

  3. Atkinson, A.: An enlarged role for tax-benefit models. In: Lelkes, O., Sutherland, H. (eds.) Tax and Benefit Policies in the Enlarged Europe: Assessing the Impact withMicrosimulationModels, pp. 3346. Vienna, Ashgate (2009)

  4. Atkinson, A.: The restoration of welfare economics. Am. Econ. Rev. Pap. Proc. 101, 157–161 (2011)

    Article  Google Scholar 

  5. Atkinson, A., Bourguignon, F.: The comparison of multi-dimensioned distributions of economic status. Rev. Econ. Stud. 49, 183–201 (1982)

    Article  Google Scholar 

  6. Atkinson, A., King, M., Sutherland, H.: The analysis of personal taxation and social security. Natl. Inst. Econ. Rev. 103, 63–74 (1983)

    Article  Google Scholar 

  7. Atkinson, A., Cantillon, B., Marlier, E., Nolan, B.: Social Indicators. The EU and Social Inclusion. Oxford University Press, Oxford (2002)

    Book  Google Scholar 

  8. Bargain, O., Decoster, A., Dolls, M., Neumann, D., Peichl, A., Siegloch, S.: Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US. Soc. Choice Welf. 41, 789–817 (2013)

    Article  Google Scholar 

  9. Bruno, M.-A., Bernheim, J., Ledoux, D., Pellas, F., Demertzi, A., Laureys, S.: A survey on self-assessed well-being in a cohort of chronic locked-in syndrome patients: happy majority, miserable minority. British Medical Journal Open (2011).

  10. Decancq, K., Fleurbaey, M., Schokkaert, E.: Inequality, income and well-being. In: Atkinson, A., Bourguignon, F. (eds.). Handbook of Income Distribution, vol. 2A, pp. 67–140. Elsevier, New York (2015a)

  11. Decancq, K., Fleurbaey, M., Schokkaert, E.: Happiness, equivalent income and respect for individual preferences. Economica 82, 1082–106 (2015b)

    Article  Google Scholar 

  12. Decancq, K., Schokkaert, E., Zuluaga, B.: Implementing the capability approach with respect for individual valuations: an illustration with Colombian data. Department of Economics, KU Leuven: DPS 2016.09 (2016)

  13. Decancq, K., Fleurbaey, M., Schokkaert, E.: Well-being inequality and preference heterogeneity. Economica 84, 210–238 (2017)

    Article  Google Scholar 

  14. Decoster, A., Haan, P.: Empirical welfare analysis with preference heterogeneity. Int. Tax Publ. Financ. 22, 224–51 (2015)

    Article  Google Scholar 

  15. Ferrer-i-Carbonell, A., Frijters, P.: How important is methodology for the estimates of the determinants of happiness? Econ. J. 114, 641–59 (2004)

    Article  Google Scholar 

  16. Fleurbaey, M., Maniquet, F.: A Theory of Fairness and Social Welfare. Cambridge University Press, Cambridge (2011)

    Book  Google Scholar 

  17. Fleurbaey, M., Blanchet, D.: Beyond GDP. Measuring Welfare and Assessing Sustainability. Oxford University Press, Oxford (2013)

    Book  Google Scholar 

  18. Fleurbaey, M., Luchini, S., Muller, C., Schokkaert, E.: Equivalent income and the economic evaluation of health care. Health Econ. 22, 711–29 (2013)

    Article  Google Scholar 

  19. Layard, R.: Happiness: Lessons from a New Science. Allan Lane, London (2005)

    Google Scholar 

  20. Loewenstein, G., Ubel, P.: Hedonic adaptation and the role of decision and experienced utility in public policy. J. Publ. Econ. 92, 1795–810 (2008)

    Article  Google Scholar 

  21. Nussbaum, M.: Women and Human Development: the Capabilities Approach. Cambridge University Press, Cambridge (2000)

    Book  Google Scholar 

  22. O’Donnell, G., Oswald, A.: National well-being policy and a weighted approach to human feelings. Ecol. Econ. 120, 59–70 (2015)

    Article  Google Scholar 

  23. Schokkaert, E., Van Ootegem, L., Verhofstadt, E.: Preferences and subjective job satisfaction: measuring well-being on the job for policy evaluation. CESifo Econ. Stud. 57(4), 683–714 (2011)

    Article  Google Scholar 

  24. Schokkaert, E., Van de Voorde, C., Dormont, B., Fleurbaey, M., Luchini, S., Samson, A.-L., Thébaut, C.: Equity in health and equivalent incomes. In: Rosa Dias, P., O’Donnell, O. (eds.) Health and Inequality (Research on Economic Inequality, Volume 21), pp. 131–56, Bingley, Emerald (2013)

  25. Schokkaert, E., Steel, J., Van de Voorde, C.: Out-of-pocket payments and subjective unmet need of health care. Appl. Health Econ. Health Policy 15, 545–555 (2017)

    Article  Google Scholar 

  26. Sen, A.: Commodities and Capabilities. North-Holland, Amsterdam (1985)

    Google Scholar 

  27. Stiglitz, J., Sen, A., Fitoussi, J.-P.: Report by the Commission on the Measurement of Economic Performance and Social Progress. Paris (2009)

  28. Sutherland, H., Figari, F.: EUROMOD: The European Union tax-benefit microsimulation model. Int. J. Microsimul. 6, 4–26 (2013)

    Google Scholar 

Download references


This research was supported by the NORFACE ERA-NET (New Opportunities for Research Funding Agency Co-operation in Europe Network) Welfare State Futures Program, Grant Number 462-14-010. The results presented here are based on EUROMOD version G2.35. EUROMOD is maintained, developed and managed by the Institute for Social and Economic Research (ISER) at the University of Essex, in collaboration with national teams from the EU member states. We are indebted to the many people who have contributed to the development of EUROMOD. The process of extending and updating EUROMOD is financially supported by the European Union Program for Employment and Social Innovation ‘Easi’ (2014-2020). We make use of microdata from the EU Statistics on Incomes and Living Conditions (EU - SILC) made available by Eurostat (59 /2013 - EU - SILC - LFS). The results and their interpretation are the authors’ responsibility. We thank the editor and an anonymous referee for their useful comments.

Author information



Corresponding author

Correspondence to Erik Schokkaert.

Electronic supplementary material

Below is the link to the electronic supplementary material.

(PDF 190 KB)

Rights and permissions

Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (, which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Jara, H.X., Schokkaert, E. Putting measures of individual well-being to use for ex-ante policy evaluation. J Econ Inequal 15, 421–440 (2017).

Download citation


  • Disposable income
  • Satisfaction
  • Equivalent income
  • Microsimulation