Question on welfare metrics

[jpfeifer]

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A problem with welfare metrics

Dear Professor Pfeifer, I want to measure the welfare variation using consumption equivalent. I know how to do this when there is only one type of household. While in the model with heterogenous household as patient and impatient, I am confused on how to deal with the consumption compensation parameter \lambda. e.g. The two untility function of households with compensation parameters are: {{E}_{t}}\sum\limits_{k=0}^{\infty }{\beta _{P}^{k}\left[ \log \left( 1+{{\lambda }^{P}} \right)c_{t+k}^{…