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Fri Mar 31 17:18:42 2006 |
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----------------- HES POSTING -----------------
I have found Dutch economist Bernhard van Praag's work (a.k.a. the Leyden
School) in the field of utility measurement rather convincing. In short
(and incomplete):
His questionnaire approach is based on the assumption that respondents are
willing to provide the best information possible. By setting the zero-one
interval as permissible range, the utility function assumes the
characteristics of a statistical density function with all its properties.
The density function with the most embodied information (entropy) is the
normal distribution. Thus, respondents effectively provide information that
can be interpreted on the same statistical features as the normal
distribution. Still, this does not measure cardinal utility but a (series
of) level(s) of satisfaction "a la" ordinal ranking. Results are not
comparable among respondents, given the ordinality of responses.
BvP uses the results, i.a., to suggest equivalence scales and subjective
poverty lines. It is a promising approach -- original in its assumption and
design and rather robust in results. It beats the traditional "political"
manipulation.
Jesse Vorst
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