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On The Aggregation Of Money Measures Of Well-Being In Applied Welfare Economics

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  • Donaldson, David

Abstract

This article investigates the properties, good and bad, of social evaluations based on four money measures of well-being or changes in well-being: compensating variations, money metrics, extended money metrics, and welfare ratios. Consistency of social rankings (transitivity, asymmetry of preference), the possibility of incorporating inequality aversions, independence of the choice of reference prices, and the ethics implicit in the evaluations are considered. In addition, these procedures are contrasted with utility aggregation using equivalence scales.

Suggested Citation

  • Donaldson, David, 1992. "On The Aggregation Of Money Measures Of Well-Being In Applied Welfare Economics," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(1), pages 1-12, July.
    • Handle: RePEc:ags:jlaare:30731
    DOI: 10.22004/ag.econ.30731
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    Cited by:

    1. Creedy, John & Gemmell, Norman & Hérault, Nicolas & Mok, Penny, 2018. "Microsimulation Analysis of Optimal Income Tax Reforms. An Application to New Zealand," Working Paper Series 20834, Victoria University of Wellington, Chair in Public Finance.
    2. Pendakur, Krishna, 2002. "Taking prices seriously in the measurement of inequality," Journal of Public Economics, Elsevier, vol. 86(1), pages 47-69, October.
    3. André Decoster & Peter Haan, 2015. "Empirical welfare analysis with preference heterogeneity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(2), pages 224-251, April.
    4. DECANCQ, Koen & FLEURBAEY, Marc & SCHOKKAERT, Erik, 2014. "Inequality, income, and well-being," LIDAM Discussion Papers CORE 2014018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Jean-Yves Duclos & Paul Makdissi & Abdelkrim Araar, 2014. "Pro-poor indirect tax reforms, with an application to Mexico," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(1), pages 87-118, February.
    6. John Creedy & Nicolas Hérault, 2011. "Decomposing Inequality and Social Welfare Changes: The Use of Alternative Welfare Metrics," Melbourne Institute Working Paper Series wp2011n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. John Creedy & Norman Gemmell & Nicolas Hérault & Penny Mok, 2020. "A microsimulation analysis of marginal welfare-improving income tax reforms for New Zealand," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(2), pages 409-434, April.
    8. Albert van der Horst & Arjan Lejour & Bas Straathof, 2006. "Innovation policy; Europe or the member states?," CPB Document 132.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Christopher Chambers & Takashi Hayashi, 2012. "Money-metric utilitarianism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(4), pages 809-831, October.
    10. Leon Bettendorf & Albert Van Der Horst & Ruud A. De Mooij & Hendrik Vrijburg, 2010. "Corporate Tax Consolidation and Enhanced Cooperation in the European Union," Fiscal Studies, Institute for Fiscal Studies, vol. 31(4), pages 453-479, December.
    11. Marc Fleurbaey & François Maniquet, 2019. "Well-being measurement with non-classical goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(3), pages 765-786, October.
    12. Duclos, Jean-Yves & Makdissi, Paul & Wodon, Quentin, 2002. "Socially-Efficient Tax Reforms," Cahiers de recherche 0201, Université Laval - Département d'économique.
    13. Udo Ebert, 2013. "The relationship between individual and household measures of WTP and WTA," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(2), pages 367-390, February.
    14. Jean-Yves Duclos & Paul Makdissi & Quentin Wodon, 2008. "Socially Improving Tax Reforms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1505-1537, November.
    15. Krishna Pendakur, 2001. "Consumption Poverty in Canada, 1969 to 1998," Canadian Public Policy, University of Toronto Press, vol. 27(2), pages 125-149, June.
    16. A. B. Atkinson, 2009. "Economics as a Moral Science," Economica, London School of Economics and Political Science, vol. 76(s1), pages 791-804, October.
    17. Thomas F. Crossley & Krishna Pendakur, 2002. "Consumption Inequality," Department of Economics Working Papers 2002-09, McMaster University.
    18. Ida Petrillo, 2018. "Computation of Equivalent Incomes and Social Welfare for EU and Non-EU Countries," CESifo Economic Studies, CESifo Group, vol. 64(3), pages 396-425.
    19. Creedy, John & Gemmell, Norman & Hérault, Nicolas & Mok, Penny, 2018. "Microsimulation Analysis of Optimal Income Tax Reforms. An Application to New Zealand," GLO Discussion Paper Series 213, Global Labor Organization (GLO).
    20. Creedy, John, 2013. "Alternative Distributions for Inequality and Poverty Comparisons," Working Paper Series 18784, Victoria University of Wellington, Chair in Public Finance.
    21. John Creedy, 2013. "Alternative Distributions for Inequality and Poverty Comparisons," Treasury Working Paper Series 13/11, New Zealand Treasury.
    22. Keir G. Armstrong, 2004. "A Graphical Depiction of Hicksian Partial-Equilibrium Welfare Analysis," Carleton Economic Papers 04-09, Carleton University, Department of Economics.
    23. Cormac O'Dea & Ian Preston, 2012. "The distributional impact of public spending in the UK," IFS Working Papers W12/06, Institute for Fiscal Studies.
    24. Udo Ebert, 1995. "On measurability and comparability: Comment on Pauwels's “the implicit welfare weights used when maximizing aggregate surplus”," Journal of Economics, Springer, vol. 61(3), pages 317-328, October.
    25. Donaldson, David & Pendakur, Krishna, 2004. "Equivalent-expenditure functions and expenditure-dependent equivalence scales," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 175-208, January.

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