Measuring variations in lifetime welfare ex ante and ex post:some exploratory calculations
Abstract
Whereas longevity-adjusted consumption measures have become increasingly used as indicators of lifetime standards of living, it remained unnoticed that those measures, by relying on period - rather than cohort - life tables, constitute indicators of expected - rather than actual - lifetime standards of living. In order to estimate the actual gap between ex ante and ex post measures of lifetime welfare, this paper computes, for 19th-century European economies, longevity-adjusted consumption measures based on period and cohort life tables. It is shown that the gap between ex ante and ex post measures is statistically significant, and that attempts to reduce it are likely to be unsuccessful, because standards of living tend to exhibit, over temporal horizons as long as a human life, structural breaks, which make the ex ante measurement of lifetime welfare highly speculative.