Potential Use of the Life Satisfaction Approach to Value Nonmarket Goods and Services | Asian Development Bank

Potential Use of the Life Satisfaction Approach to Value Nonmarket Goods and Services

Publication | January 2019
Potential Use of the Life Satisfaction Approach to Value Nonmarket Goods and Services

In this report, the life satisfaction approach to economic analysis is explained and illustrated with an example from Iloilo, Philippines.

Recommendations are offered for application of the technique in the economic analysis of investment projects. The approach estimates Hicksian compensating variation using self-reported subjective well-being to calculate the marginal rate of substitution of income for nonmarket amenities or services.

Contents 

  • Introduction
  • The Economics of the Life Satisfaction Approach
  • Metropolitan Iloilo Case Study
  • Discussion
  • Conclusion
  • Appendix: Common Determinants of Individual Life Satisfaction