Empirical Uses of Subjective Measures of Well Being
We describe a simple method to estimate household cost functions and family equivalence scales. It is an alternative to standard methods as it does not assume strong postulates about utility maximization nor any functionally specified model equations. The data requirements are extremely modest. We assume interVan Praag is a professor of economics at the Econometric Institute, Erasmus University, Rotterdam, and a member of the Scientific Council for Government Policy of the Netherlands. Van der Sar is an assistant professor of business finance at Erasmus University in Rotterdam, the Netherlands. When the authors began preparing the paper, Van Praag was affiliated with the Center for Research in Public Economics of Leyden University and a fellow of the Netherlands Institute for the Advancement of the Sciences at Wassenaar. He created this paper's European data set jointly with Aldi Hagenaars and Hans Van Weeren, with financial support from the European Community, Brussels. The American data set was made available by Steven Dubnoff of the Survey Research Center, University of Massachusetts, Boston. It was created with support from a grant by the National Science Foundations. The authors want to express their gratitude to all institutes and individuals mentioned and also to Reuben Gronau, Aldi Hagenaars, Joop Hartog, and Paul M. C. de Boer, who gave valuable advice during various stages of preparation. They are also grateful to three anonymous referees for valuable suggestions and encouraging advice. They take