German reunification: Welfare gains and losses East and West

Abstract

A framework of welfare accounts (Juster and Stafford, 1985; Headey, 1993; see also Goodin et al., 1999) is used to assess gains and losses to East and West Germans in the post-reunification period, 1990-97. The welfare accounts have three segments: a capital/stocks account, an income/flows account and a subjective welfare/psychic income account. This framework differs from conventional welfare economic accounts in explicitly defining and measuring welfare in psychological terms ... as perceived utility/satisfaction. It has recently been argued that this approach is required, if one accepts that individual utilities are not exogenous but are affected by changing comparisons with others (Duese..