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Exact and Superlative Welfare Change Indicators

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  • Diewert, W E

Abstract

An exact welfare change indicator is defined to be a known function of the price and quantity data for two periods (for a utility maximizing consumer) which is exactly equal to the Hicksian equivalent variation. A welfare change indicator is termed superlative if it is exactly equal to the equivalent variation for an expenditure function that has a second-order approximation property. The paper exhibits a number of superlative welfare change indicators, and also reviews the earlier attempts of J. R. Hicks and M. L. Weitzman to obtain equivalent variation measures that had a second-order approximation property. Copyright 1992 by Oxford University Press.

Suggested Citation

  • Diewert, W E, 1992. "Exact and Superlative Welfare Change Indicators," Economic Inquiry, Western Economic Association International, vol. 30(4), pages 562-582, October.
    • Handle: RePEc:oup:ecinqu:v:30:y:1992:i:4:p:562-82
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    Cited by:

    1. Barnett, William A. & Erwin Diewert, W. & Zellner, Arnold, 2011. "Introduction to measurement with theory," Journal of Econometrics, Elsevier, vol. 161(1), pages 1-5, March.
    2. Claude Hillinger, 2002. "A General Theory of Price and Quantity Aggregation and Welfare Measurement," CESifo Working Paper Series 818, CESifo.
    3. Smith, V. Kerry & Van Houtven, George & Pattanayak, Subhrendu, 1999. "Benefit Transfer as Preference Calibration," RFF Working Paper Series dp-99-36, Resources for the Future.
    4. Lilyan Fulginiti & Richard Perrin, 2005. "Productivity and Welfare," Journal of Productivity Analysis, Springer, vol. 24(2), pages 133-155, October.
    5. 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).
    6. Perrin, Richard K. & Fulginiti, Lilyan E., 1998. "Technological Change And Welfare In An Economy With Distortions," 1998 Annual meeting, August 2-5, Salt Lake City, UT 21013, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Hideyuki Mizobuchi & Valentin Zelenyuk, 2023. "A generalized flexible functional form for α-returns to scale," Journal of Productivity Analysis, Springer, vol. 59(3), pages 217-224, June.
    8. Barnett, William A. & Choi, Ki-Hong, 2008. "Operational identification of the complete class of superlative index numbers: An application of Galois theory," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 603-612, July.
    9. Tiboldo, Giulia & Boehm, Rebecca & Shah, Farhed & Moro, Daniele & Castellari, Elena, 2022. "Taxing the heat out of the U.S. food system," Food Policy, Elsevier, vol. 110(C).
    10. Hillinger Claude, 2001. "Money Metric, Consumer Surplus and Welfare Measurement," German Economic Review, De Gruyter, vol. 2(2), pages 177-193, May.
    11. Hillinger, Claude, 2008. "Measuring Real Value and Inflation," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-26.
    12. Tiboldo, G. & Castellari, E. & Moro, D., 2024. "The distributional implications of health taxes: A case study on the Italian sugar tax," Food Policy, Elsevier, vol. 126(C).
    13. Robert J. Hill & Alice O. Nakamura, 2010. "Improving Inflation And Related Performance Measures For Nations: An Introduction," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages 1-10, June.
    14. Richard Batley & Thijs Dekker, 2019. "The Intuition Behind Income Effects of Price Changes in Discrete Choice Models, and a Simple Method for Measuring the Compensating Variation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 337-366, September.
    15. Smed, Sinne & Jensen, Jorgen Dejgaard & Denver, Sigrid, 2005. "Differentiated Food Taxes as a Tool in Health and Nutrition Policy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24579, European Association of Agricultural Economists.
    16. Smith, V. Kerry & Houtven, George Van & Pattanayak, Subhrendu, 1999. "Improving the Practice of Benefit Transfer: A Preference Calibration Approach," Western Region Archives 321702, Western Region - Western Extension Directors Association (WEDA).
    17. W. Erwin Diewert, 1995. "Price and Volume Measures in the System of National Accounts," NBER Working Papers 5103, National Bureau of Economic Research, Inc.
    18. Edjabou, Louise Dyhr & Smed, Sinne, 2013. "The effect of using consumption taxes on foods to promote climate friendly diets – The case of Denmark," Food Policy, Elsevier, vol. 39(C), pages 84-96.
    19. Tiboldo, Giulia & Boehm, Rebecca L. & Castellari, Elena & Shah, Farhed A., 2017. "Use of a Carbon Tax on Food Purchases to Reduce Greenhouse Gas Emissions in the U.S," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258275, Agricultural and Applied Economics Association.
    20. Lee, Young-Jae & Kennedy, P. Lynn, 2009. "Effects of Price and Quality Differences in Source Differentiated Beef on Market Demand," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(1), pages 1-12, April.

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