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Bentham or Nash? On the Acceptable Form of Social Welfare Functions

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  • YEW‐KWANG NG

Abstract

The acceptability of the Nash Social Welfare Function is questioned because a minute (perhaps hardy perceivable) welfare change of someone with a very low welfare level might overwhelm enormous welfare changes of others. The axiomatic derivation of the Nash SWF by Kaneko and Nakamura is analyzed. Arguments for and against social welfare as separable in, linear in, and an unweighted sum of individual welfares are critically discussed. Separability follows from the individualistic ethics (Fleming, Sugden and Weale). Linearity follows from the ‘logic’ of rational choice in the face of risk (Harsanyi). (Diamond's counter‐example is rejected.) Unweighted sum follows from either (i) informational restriction precluding interpersonal comparison of welfare levels (D'Aspremont and Gevers, Maskin); or (ii) with finite sensibility, equation of just‐perceivable increments of welfare across persons (Edgeworth) or the Weak Majority Preference Criterion (Ng).

Suggested Citation

  • Yew‐Kwang Ng, 1981. "Bentham or Nash? On the Acceptable Form of Social Welfare Functions," The Economic Record, The Economic Society of Australia, vol. 57(3), pages 238-250, September.
    • Handle: RePEc:bla:ecorec:v:57:y:1981:i:3:p:238-250
    DOI: 10.1111/j.1475-4932.1981.tb01058.x
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    2. Robert Shelburne, 2006. "A Utilitarian Welfare Analysis of Trade Liberalization," ECE Discussion Papers Series 2006_4, UNECE.
    3. Louis Kaplow, 2022. "Optimal Income Taxation," NBER Working Papers 30199, National Bureau of Economic Research, Inc.
    4. Hom M Pant, 1996. "Endogenous Behaviour of the Tariff Rate in a Political Economy," International Trade 9609001, University Library of Munich, Germany, revised 01 Oct 1996.
    5. Keith L. Dougherty & Julian Edward, 2010. "The Properties of Simple Vs. Absolute Majority Rule: Cases Where Absences and Abstentions Are Important," Journal of Theoretical Politics, , vol. 22(1), pages 85-122, January.
    6. W. Max Corden & Peter Forsyth & Christis G. Tombazos, 2008. "Distinguished Fellow of the Economic Society of Australia, 2007: Yew‐Kwang Ng," The Economic Record, The Economic Society of Australia, vol. 84(265), pages 267-272, June.
    7. Louis Kaplow, 1994. "A Fundamental Objection to Tax Equity Norms: A Call for Utilitarianism," NBER Working Papers 4961, National Bureau of Economic Research, Inc.
    8. James Yunker, 1985. "A broad utilitarian theory of value and moral value," Forum for Social Economics, Springer;The Association for Social Economics, vol. 15(1), pages 29-59, March.
    9. Fabbri Marco & GC Britto Diogo, 2018. "Distributive Justice, Public Policies and the Comparison of Legal Rules: Quantify the “Price of Equity”," Review of Law & Economics, De Gruyter, vol. 14(3), pages 1-23, November.
    10. Olof Johansson-Stenman & Fredrik Carlsson & Dinky Daruvala, 2002. "Measuring Future Grandparents" Preferences for Equality and Relative Standing," Economic Journal, Royal Economic Society, vol. 112(479), pages 362-383, April.

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