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Cardinal vs. Characteristic Indices of Preference for Applied Welfare Economics

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  • Dale O. Stahl II

    (Duke University)

Abstract

The concept of cardinality is defined for a binary index of preference. The qualifications on the cardinality of the compensating and equivalent variations are examined in detail. It is argued that a characteristic index, such as the sign of the monotonic variation of consumer surplus, is adequate for most practical applications.

Suggested Citation

  • Dale O. Stahl II, 1984. "Cardinal vs. Characteristic Indices of Preference for Applied Welfare Economics," Public Finance Review, , vol. 12(4), pages 473-486, October.
    • Handle: RePEc:sae:pubfin:v:12:y:1984:i:4:p:473-486
    DOI: 10.1177/109114218401200405
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    References listed on IDEAS

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    1. Vartia, Yrjo O, 1983. "Efficient Methods of Measuring Welfare Change and Compensated Income in Terms of Ordinary Demand Functions," Econometrica, Econometric Society, vol. 51(1), pages 79-98, January.
    2. Zajac, E. E., 1979. "Dupuit-marshall consumer's surplus, utility, and revealed preference," Journal of Economic Theory, Elsevier, vol. 20(2), pages 260-270, April.
    3. Chipman, John S & Moore, James C, 1980. "Compensating Variation, Consumer's Surplus, and Welfare," American Economic Review, American Economic Association, vol. 70(5), pages 933-949, December.
    4. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-597, September.
    5. J. R. Hicks, 1942. "Consumers' Surplus and Index-Numbers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(2), pages 126-137.
    6. Hause, John C, 1975. "The Theory of Welfare Cost Measurement," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1145-1182, December.
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