WWS 300 Lecture Notes - Lecture 1: Convex Preferences, Indifference Curve, Negative Number

• School: Princeton University
• Department: Woodrow Wilson School
• Course: WWS 300
• Professor: Marc Fleurbaey

Document Summary

Slide: what are the alternatives? (to gdp) Gni truly reflects the purchasing power of the people, more so than gdp. The geometric mean takes into account compounding over time. Geometric: the usage of it was to penalize countries that were low on one dimension. Low value on one component will sink the value of your indicator. It"s to promote or encourage this not to happen. They take income per capita and deduct from that the cost of certain gaps. If it"s less than the reference, then that"s a cost. Evaluate it with the coefficient of wtp (willingness to pay). Do this by relying on subjective well- being data. It"s hard to compare countries bc they"re different in so many ways. You can compare them in term of their equivalent incomes. Professor thinks it makes sense to make the reference be an ideal/desirable/normal value. Equivalent income = (income) - (wtp x gap to the ideal)