IDEAS home Printed from https://ideas.repec.org/p/clt/sswopa/1295.html
   My bibliography  Save this paper

Money metric utilitarianism

Author

Listed:
  • Chambers, Christopher P.
  • Hayashi, Takashi

Abstract

We discuss a method of ranking allocations in economic environments which applies when we do not know the names or preferences of individual agents. We require that two allocations can be ranked with the knowledge only of agents present, their aggregate bundles, and community indifference sets—a condition we refer to as aggregate independence. We also postulate a basic Pareto and continuity property, and a property stating that when two disjoint economies and allocations are put together, the ranking in the large economy should be consistent with the rankings in the two smaller economies (reinforcement). We show that a ranking method satisfies these axioms if and only if there is a probability measure over the strictly positive prices for which the rule ranks allocations on the basis of the random-price money-metric utilitarian rule. This is a rule which computes the money-metric utility for each agent at each price, sums these, and then takes an expectation according to the probability measure. Copyright Springer-Verlag 2012
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Chambers, Christopher P. & Hayashi, Takashi, "undated". "Money metric utilitarianism," Working Papers 1295, California Institute of Technology, Division of the Humanities and Social Sciences.
    • Handle: RePEc:clt:sswopa:1295
    as

    Download full text from publisher

    File URL: http://www.hss.caltech.edu/SSPapers/sswp1295.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Marc Fleurbaey & Maurice Salles & John A. Weymark, 2008. "Justice, Political Liberalism, and Utilitarism : Themes from Harsanyi and Rawls," Post-Print halshs-00337593, HAL.
    2. Fleurbaey, Marc & Suzumura, Kotaro & Tadenuma, Koichi, 2005. "Arrovian aggregation in economic environments: how much should we know about indifference surfaces?," Journal of Economic Theory, Elsevier, vol. 124(1), pages 22-44, September.
    3. Lionel McKenzie, 1957. "Demand Theory Without a Utility Index," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(3), pages 185-189.
    4. McKenzie,George W., 1983. "Measuring Economic Welfare," Cambridge Books, Cambridge University Press, number 9780521248624, September.
    5. Paul A. Samuelson, 1956. "Social Indifference Curves," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 1-22.
    6. Young, H Peyton, 1974. "A Note on Preference Aggregation," Econometrica, Econometric Society, vol. 42(6), pages 1129-1131, November.
    7. Blackorby, Charles & Donaldson, David, 1988. "Money metric utility: A harmless normalization?," Journal of Economic Theory, Elsevier, vol. 46(1), pages 120-129, October.
    8. Claude D'Aspremont & Louis Gevers, 1977. "Equity and the Informational Basis of Collective Choice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(2), pages 199-209.
    9. Marc Fleurbaey & François Maniquet, 2005. "Fair social orderings when agents have unequal production skills," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 24(1), pages 93-127, September.
    10. 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.
    11. Michel Breton, 1997. "Arrovian Social Choice on Economic Domains," International Economic Association Series, in: Kenneth J. Arrow & Amartya Sen & Kotaro Suzumura (ed.), Social Choice Re-examined, chapter 4, pages 72-96, Palgrave Macmillan.
    12. Marc Fleurbaey & François Maniquet, 2006. "Fair Income Tax," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(1), pages 55-83.
    13. Honkapohja, Seppo, 1987. "On Continuity of Compensated Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 545-557, October.
    14. Smith, John H, 1973. "Aggregation of Preferences with Variable Electorate," Econometrica, Econometric Society, vol. 41(6), pages 1027-1041, November.
    15. Alcantud, J. C. R. & Manrique, A., 2001. "Continuous representation by a money-metric function," Mathematical Social Sciences, Elsevier, vol. 41(3), pages 365-373, May.
    16. Fleurbaey,Marc & Salles,Maurice & Weymark,John A. (ed.), 2008. "Justice, Political Liberalism, and Utilitarianism," Cambridge Books, Cambridge University Press, number 9780521640930, September.
    17. Eric Maskin, 1978. "A Theorem on Utilitarianism," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(1), pages 93-96.
    18. 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.
    19. Marc Fleurbaey & Maurice Salles & John A. Weymark, 2008. "Justice, Political Liberalism and Utilitarianism," Post-Print hal-00246415, HAL.
    20. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-1289, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bosmans, Kristof & Decancq, Koen & Ooghe, Erwin, 2018. "Who's afraid of aggregating money metrics?," Theoretical Economics, Econometric Society, vol. 13(2), May.
    2. Christopher P. Chambers & Alan D. Miller, 2014. "Inefficiency Measurement," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 79-92, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M. Ali Khan & Edward E. Schlee, 2016. "On Lionel McKenzie's 1957 intrusion into 20th‐century demand theory," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 589-636, May.
    2. Paolo Giovanni Piacquadio, 2017. "A Fairness Justification of Utilitarianism," Econometrica, Econometric Society, vol. 85, pages 1261-1276, July.
    3. Giacomo Valletta, 2014. "Health, fairness and taxation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(1), pages 101-140, June.
    4. Aitor Calo-Blanco, 2015. "Health, responsibility and taxation with a fresh start," Working Papers 15.06, Universidad Pablo de Olavide, Department of Economics.
    5. Marc Fleurbaey & Koichi Tadenuma, 2007. "Do Irrelevant Commodities Matter?," Econometrica, Econometric Society, vol. 75(4), pages 1143-1174, July.
    6. 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).
    7. Sakai, Toyotaka, 2009. "Walrasian social orderings in exchange economies," Journal of Mathematical Economics, Elsevier, vol. 45(1-2), pages 16-22, January.
    8. Valletta, G., 2012. "Health, fairness and taxation," Research Memorandum 017, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    9. Marc Fleurbaey, 2009. "Beyond GDP: The Quest for a Measure of Social Welfare," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 1029-1075, December.
    10. Fleurbaey, Marc, 2007. "Two criteria for social decisions," Journal of Economic Theory, Elsevier, vol. 134(1), pages 421-447, May.
    11. Giacomo, VALETTA, 2007. "A fair solution to the compensation problem," Discussion Papers (ECON - Département des Sciences Economiques) 2007038, Université catholique de Louvain, Département des Sciences Economiques.
    12. Fleurbaey, Marc & Maniquet, François, 2015. "Optimal taxation theory and principles of fairness," LIDAM Discussion Papers CORE 2015005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Claude Hillinger, 2002. "A General Theory of Price and Quantity Aggregation and Welfare Measurement," CESifo Working Paper Series 818, CESifo.
    14. Askoura, Youcef & Billot, Antoine, 2021. "Social decision for a measure society," Journal of Mathematical Economics, Elsevier, vol. 94(C).
    15. Ali Khan, M. & Schlee, Edward E., 2017. "The nonconcavity of money-metric utility: A new formulation and proof," Economics Letters, Elsevier, vol. 154(C), pages 10-12.
    16. Blackorby, Charles & Bossert, Walter, 2004. "Interpersonal comparisons of well-being," Economic Research Papers 269605, University of Warwick - Department of Economics.
    17. Susanne Fuchs-Seliger, 2016. "Axiomatic Models of Rational Behavior and Interpretations," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 33(4), pages 385-401, December.
    18. Keir G. Armstrong, 2004. "A Graphical Depiction of Hicksian Partial-Equilibrium Welfare Analysis," Carleton Economic Papers 04-09, Carleton University, Department of Economics.
    19. Edward E. Schlee & M. Ali Khan, 2022. "Money Metrics In Applied Welfare Analysis: A Saddlepoint Rehabilitation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 189-210, February.
    20. Antonin Macé, 2017. "Voting with evaluations: characterizations of evaluative voting and range voting," Working Papers halshs-01222200, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:clt:sswopa:1295. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victoria Mason (email available below). General contact details of provider: http://www.hss.caltech.edu/ss .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.