Interpersonal comparisons by means of money metric utilities: why one should use the same reference prices for all

Capéau, B., Decoster, A. and De Sadeleer, L. (2019), Interpersonal comparisons by means of money metric utilities: why one should use the same reference prices for all, Discussion Paper Series DPS19.05, Department of Economics KU Leuven.
ABSTRACT

We show that using different reference prices for different individuals in money metrics of well–being leads to violations of several normative properties of interpersonal welfare comparisons that have become popular in the fairness literature. An empirical illustration for Belgian single adults available for the labour market in 2015 shows that the violation of these principles in the labour consumption context, is all but exceptional.