During his Leyden period, Van Praag initiated and acted as leader of the Leyden School project, his main co-authors being Arie Kapteyn and Aldi Hagenaars. Van Praag argued in his Ph.D. dissertation that utility of money could be seen as a cardinal concept. Based on this idea he devised a specific question module, the Income Evaluation Question, intended to ask respondents which income level they would call "good", "sufficient", "bad", etc. The IEQ has been posed since 1970 to many thousands of respondents in large-scale surveys. Van Praag estimated the WFI for thousands of individuals in most countries of Western Europe. He discovered a preference drift, whereby the WFI of the individual depends on current income and shifts with rising income to the right. Kapteyn and Van Praag discovered reference drift, which means that individual welfare depends on the income of the reference group members. The analysis led to the estimation of subjective family equivalence scales and subjective definitions of poverty. He carried out several large-scale poverty studies for the European Union. Van Praag has also been active on econometric methodology, labour and health economics, conjoint or vignette analysis and the economics of ageing. The Leyden School may be seen as a precursor of modern happiness economics by about twenty years. In the words of Claudia Senik when reviewing Happiness Quantified: Andrew Clark et al. in their authoritative survey comparing Van Praag's work with the happiness papers from 1990 onwards write:
Recent research
After a relative calm period, during which Van Praag was engaged in semi-commercial research, Van Praag resumed his academic research at the end of the 1990s. He enriched his research by adopting the satisfaction question module used by modern happiness economists. His main new results are the application of happiness economics with Barbara Baarsma to estimate shadow prices of airplane-noise hindrance near Amsterdam Airport, which method may be used for estimating the shadow prices of other external effects as well and the development of a two-layer model with Frijters and Ferrer-i-Carbonell, where life satisfaction is seen as an aggregate of domain satisfactions. He published in 2004 the comprehensive monograph Happiness Quantified, a Satisfaction Calculus Approach, which was revised in 2008 and translated into Chinese in 2010. He is a regular contributor to the Dutch dailies NRC Handelsblad and de Volkskrant and the professional weekly Economisch-Statistische Berichten.
1968 Individual Welfare Functions and Consumer Behavior - a Theory of Rational Irrationality, North-Holland Publishing Company, Amsterdam, Contributions to Economic Analysis, nr. 57
2004 B.M.S. van Praag and A. Ferrer-i-Carbonell. Happiness Quantified: A Satisfaction Calculus Approach Oxford University Press, Oxford: UK, revised in 2008, Chinese translation 2009.
