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Interpersonal comparisons of utility and the policy paralysis problem

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  • Michael Mandler

    (Department of Economics, Harvard University, Cambridge, MA 02138 USA)

Abstract

Several "Paretian" welfare rules are equivalent when policymakers know agents' characteristics, e.g., a policy is optimal if (a) any other policy making someone better off harms some agent, or (b) it is the maximum of some social welfare function. This paper extends these and other rules to environments where policymakers have a probability distribution over a state space of possible models. Under weak conditions, rule (a), which postulates ex ante preferences for agents, recommends some change from almost every status quo policy. Unfortunately, (a) requires a demanding form of interpersonal welfare comparability. Rule (b) labels all policies optimal if the state space obeys a weak diversity condition. Since the probabilities of states are irrelevant for this result, only a small perturbation of a model with no uncertainty generates policy paralysis.

Suggested Citation

  • Michael Mandler, 2000. "Interpersonal comparisons of utility and the policy paralysis problem," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 17(1), pages 95-115.
    • Handle: RePEc:spr:sochwe:v:17:y:2000:i:1:p:95-115
    Note: Received: 26 March 1997/Accepted: 16 November 1998
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    Cited by:

    1. Michael Mandler, 2007. "Policy Discrimination with and without Interpersonal Comparisons of Utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(3), pages 523-549, September.

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