ON THE AGGREGATION OF MONEY MEASURES OF WELL-BEING IN APPLIED WELFARE ECONOMICS

This article investigates the properties, good and bad, of social evaluations based on four money measures of well-being or changes in well-being: compensating variations, money metrics, extended money metrics, and welfare ratios. Consistency of social rankings (transitivity, asymmetry of preference), the possibility of incorporating inequality aversions, independence of the choice of reference prices, and the ethics implicit in the evaluations are considered. In addition, these procedures are contrasted with utility aggregation using equivalence scales.