How do you apply isoelastic utility to real world consumption/income values? For, say, calculating “equivalent sacrifice” donation amounts for people with different incomes.
When I’ve tried to apply the formula, incomes as different as $10k and $80k both seem to equal “almost 2.0 utility”, and I don’t know what to do with this.
How do you apply isoelastic utility to real world consumption/income values? For, say, calculating “equivalent sacrifice” donation amounts for people with different incomes.
When I’ve tried to apply the formula, incomes as different as $10k and $80k both seem to equal “almost 2.0 utility”, and I don’t know what to do with this.