In normative public economics it is crucial to know how fast the marginal utility of income declines as income increases. One needs this parameter for cost-bene[fi]t analysis, for optimal taxation and for the (Atkinson) measurement of inequality. We estimate this parameter using four large...

The findings of behavioural economics and happiness research pose serious challenges for public policy analysis. Key findings relate to - externality (people's happiness depends on what others have) - mistakes (which arise from ignorance or misforecasting of happiness), and - tastes (which are...