Relativity, rank and the utility of income

Rablen, M.D. 2008. Relativity, rank and the utility of income. Economic Journal. 118 (528), pp. 801-821.

TitleRelativity, rank and the utility of income
AuthorsRablen, M.D.
Abstract

Relative utility has become an important concept in several disjoint areas of economics. I present a cardinal model of income utility based on the supposition that agents care about their rank in the income distribution and that utility is subject to adaptation over time. Utility levels correspond to the Leyden Individual Welfare Function while utility differences yield a version of the prospect theory value function, thereby providing a new and shared derivation of each. I offer an explanation of some long-standing paradoxes in the wellbeing literature and an insight into the links between relative comparisons and loss aversion.

JournalEconomic Journal
Journal citation118 (528), pp. 801-821
ISSN0013-0133
YearApr 2008
PublisherBlackwell
Digital Object Identifier (DOI)doi:10.1111/j.1468-0297.2008.02143.x
Publication dates
PublishedApr 2008

Related outputs

Mortality and immortality: the Nobel Prize as an experiment into the effect of status upon longevity
Rablen, M.D. and Oswald, A.J. 2008. Mortality and immortality: the Nobel Prize as an experiment into the effect of status upon longevity. Journal of Health Economics. 27 (6), pp. 1462-1471.

Relativity in judgements: the implications of a concern for relative position on well-being, longevity and decision making
Rablen, M.D. 2008. Relativity in judgements: the implications of a concern for relative position on well-being, longevity and decision making. Saabrucken, Germany VDM Verlag.

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