In this paper we distinguish two ‘dimensions’ of the utility concept. The first is the ‘behavioral’ dimension, described by indifference curves in a commodity space. It may be estimated by observing consumer purchase behavior. The second dimension is the ‘welfare’ dimension, i.e., the cardinal utility levels corresponding to indifference curves. The second dimension may be estimated by means of the income evaluation approach. We deal with...

Most questionnaires to obtain reports of happiness are primitive with the results obtained of low (interpersonal) comparability. This paper argues that happiness is intrinsically cardinally measurable and comparable though with many difficulties. Moreover, a sophisticated questionnaire was developed and used to obtain more accurate and interpersonally comparable reports of happiness based on the concept of just perceivable increments of pleasure/pain. Comparisons with the traditional questionnaire...

The paper approaches the ‘market versus state’ issue from the perspective of constitutional political economy, a research program that has been advanced as a principal alternative to traditional welfare economics and its perspective on the relation between market and state. Constitutional political economy looks at market and state as different kinds of social arenas in which people may realize mutual gains from voluntary exchange and...

Material aspirations are initially fairly similar among income groups; consequently more income brings greater happiness. Over the life cycle, however, aspirations grow along with income, and undercut the favourable effect of income growth on happiness, although the cross‐sectional happiness‐income difference persists. People think they were less happy in the past and will be happier in the future, because they project current aspirations to be the...

Today, as in the past, within a country at a given time those with higher incomes are, on average, happier. However, raising the incomes of all does not increase the happiness of all. This is because the material norms on which judgments of well-being are based increase in the same proportion as the actual income of the society. These conclusions are suggested by data on...

Well-being is a complex construct that concerns optimal experience and functioning. Current research on well-being has been derived from two general perspectives: the hedonic approach, which focuses on happiness and defines well-being in terms of pleasure attainment and pain avoidance; and the eudaimonic approach, which focuses on meaning and self-realization and defines well-being in terms of the degree to which a person is fully functioning....

This paper analyses some one-off measures and other accounting tricks that EU member States have been using to qualify for EMU membership. Moving from empirical evidence to strategic goals, this investigation brings to the fore three crucial issues: the weakness of the methodological rules of the European system of accounts used to assess budgetary convergence in line with the Maastricht Treaty; the open-ended definition of...

Fiscal rules, such as the excessive deficit procedure and the stability and growth pact (SGP), aim at constraining government behavior. develops a model in which governments circumvent such rules by reverting to creative accounting. The amount of this depends on the reputation cost...

Using various methods, the size of the shadow economy in 76 developing, transition, and OECD countries is estimated. Average size varies from 12 percent of GDP for OECD countries, to 23 percent for transition countries and 39 percent for developing countries. Increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy, especially in OECD...

Does individual well-being depend on the absolute level of income and consumption or is it relative to one’s aspirations? In a direct empirical test, it is found that higher income aspirations reduce people’s utility, ceteris paribus. Individual data on reported satisfaction with life are used as a proxy measure for utility, and income evaluation measures are applied as proxies for people’s aspiration levels. Consistent with...