Preference elicitation methods and equivalent income: An overview

Abstract

The equivalent income is a preference-based, interpersonally comparable measure of well-being. Although its theoretical foundations are well established, empirical applications remain limited, primarily due to the detailed data requirements on individuals’ preferences across various well-being dimensions. This paper reviews the literature on preference elicitation methods with a focus on estimating equivalent income. We examine several survey-based methods, including contingent valuation, multiattribute choice or rating experiments, and life satisfaction regressions. The review highlights the advantages and limitations of each method, emphasizing the considerable scope for methodological improvements and innovations.