Skip to main content

Questions tagged [welfare-economics]

A branch of economics that focuses on the optimal allocation of resources and goods and how this affects social welfare. Welfare economics analyzes the total good or welfare that is achieve at a current state as well as how it is distributed. This relates to the study of income distribution and how it affects the common good.

Filter by
Sorted by
Tagged with
4 votes
1 answer
70 views

Studies of demand for having children as price goes to zero

Are there any studies analyzing how parents have/adopt children as the cost of having them is reduced? In particular, how many children would there be per say a thousand people if the cost were fully ...
EmmanuelMess's user avatar
1 vote
1 answer
64 views

Why is economic rent not seen as a market failure?

Economic rent seems to be behind rising inequality and stagnating growth (Stiglitz, 2016) arguing that a wealth residual explaining both declining capital and labour shares in national income is ...
Victor Nielsen's user avatar
2 votes
0 answers
18 views

How does CPI respond to change in shipping costs?

Is there any quality research that already attempted to quantify the effect of shipping costs on CPI or inflation? Preferably I am looking for an estimate relevant to EU (however, I understand there ...
Lorenzo Pozzi's user avatar
0 votes
0 answers
62 views

How to find the Walrasian eqilibrium and determine the welfare?

Suppose there are 2 farmers. Farmer 1 grows rice and farmer 2 grows wheat. There are 2 states of nature tomorow: rainy or sunny, both with probability 0.5. If it rains, farmer 1 grows 1 unit of rice ...
Ludwig Gershwin's user avatar
2 votes
0 answers
26 views

From the original position, is the Nash axiomatic bargaining solution as the social contract more egalitarian than Utilitarianism?

Let us with Hobbs suppose that life in a state of nature, without agreement on basic social values (“Murder is bad”), without benefit of our common heritage of knowledge and technology, without, in ...
andrewH's user avatar
  • 335
4 votes
1 answer
122 views

Choice Theory Book Reccomendations

I am a post-graduate economics student in India, currently taking a core course in Choice Theory. Unfortunately, there is no standardized text which we are following for the course. The course ...
Anonymous's user avatar
0 votes
0 answers
20 views

effect of tax imposition on consumer and supplier with a price ceiling

Use a supply and demand diagram, suppose there's a valid price ceiling, say at 2. Now we add a specific tax of 1, to suppliers, what is the new consumer surplus, producer surplus, and tax revenue? ...
Nonenicht's user avatar
0 votes
1 answer
39 views

Income inequality indices

I would be thankful for suggestions for standard inequality measurements such as Gini coefficient and Palma ratio. I would like to make a comparison across different countries simultaneously, hence I ...
Lebensmuede's user avatar
1 vote
1 answer
285 views

How to find the Walrasian equilibrium for non monotonic utility functions?

I just say Amit's comment on this question: The second welfare theorem without monotonicity so I got curious and tried to find both the contract curve for that particular problem, and the Walrasian ...
Nicolas Torres's user avatar
2 votes
1 answer
40 views

Measuring the Overall Effect of Joining a Trade Agreement

The UK has signed a deal to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The BBC comments that, on the government's own estimate, this will add only 0.08% ...
Adam Bailey's user avatar
  • 8,519
2 votes
1 answer
71 views

Integrating over the Y Axis: (∆CS)

The traditional formulae for consumer surplus is: $\text{CS} = \int_{0}^{x_0} [x(p_x,\overline{p_y}, \overline{m})]dx - x_0P_{x_0}$. This is the area under the Marshallian demand curve, that is only ...
CormJack's user avatar
  • 991
1 vote
1 answer
113 views

Calculating the substitution effect with the derivative

Substitution Effect (SE) for a price increase of $P_x$ to $P_x'$ can be written as: $h(P_x', P_y, U) - h(P_x, P_y, U) = ∆h$, where $h$ is Hicksian demand. Correct? The Slutsky equations decomposes a ...
CormJack's user avatar
  • 991
2 votes
0 answers
28 views

Design of technology-neutral policy in the presence of multiple market failures

I am studying a paper by Aisbett, Cheng & Beck which considers the pros and cons of technological neutrality in green industrial policy. At the start of section 5.6 it refers to the well-known ...
Adam Bailey's user avatar
  • 8,519
1 vote
0 answers
32 views

Endowment of an agent

I was going through the Shapley-Folkman-Starr Lemma (https://simons.berkeley.edu/sites/default/files/docs/3605/simons2.pdf) and I came across the term "endowment" of an agent. My assumption ...
user12632521's user avatar
0 votes
0 answers
30 views

How would a country successfully implement UBI?

Universal basic income is the principal that each citizen in a country gets a fixed amount of money from the government which should suffice for an individual to pay for at least his basic needs each ...
O'Niel's user avatar
  • 165
0 votes
0 answers
43 views

Why do we optimize utility from X1 according to itself?

In lecturer's notes we have a utility function $U_i = X_i^A * (1-L_i)^{1-a},$ $ 0< a< 1$, $ i = 1,2 $ $MP_1 = w_1 $ $MP_2 = w_2$ $X_1 + X_2 = w_1 * L_1 + w_2 * L_2$ And we need to form a ...
Yekta Aktaş's user avatar
2 votes
2 answers
595 views

What does the price-quantity diagram of a good with both negative production and consumption externalities look like?

The good in this case is coal, which I assume has both production and consumption externalities? I haven't been able to find a price-quantity diagram on google so far depicting such a case, with ...
aayush's user avatar
  • 123
0 votes
1 answer
33 views

What would be the issue if we approach inflation analysis without considering consumption bundles?

The CPI for use in calculating the rate of inflation is based off of Laspeyres' index, which is essentially the ratio of dot products of the price vector and a quantity vector. What kind of analysis ...
Panhaboth K's user avatar
3 votes
0 answers
44 views

Model the uncertain impact of a proposed policy by expected utility or other probabilistic approach

The impact of a proposed policy is often uncertain and subjected to randomness. As such, it seems natural to use probabilistic models. How to model the policy impact using the expected utility ...
user141240's user avatar
0 votes
0 answers
23 views

How to empirically measure the underlying utility function for a 'max EU" SWF? Stated/revealed preferences over uncertain lotteries, or?

Direct answers, as well as pointers to the best literature and textbook treatments, as well as the names of key researchers, are appreciated. Suppose we are considering policies and transfers that ...
daaronr's user avatar
  • 111
1 vote
1 answer
42 views

How *should* weigh income/consumption at different income levels (esp. to the very poor vs poor) ... perhaps in a 'social welfare function'?

What is the best analysis/literature/text, that gives a theoretical justification for approaches that can be used in practice, for How we should weight income/consumption at different income levels (...
daaronr's user avatar
  • 111
0 votes
0 answers
20 views

How *do* NGOs, think tanks, and governments weigh income/consumption tradeoffs/transfers at different income levels?

In considering policies and transfers, how do we (economists, NGOs, governments & think tanks) weigh income (consumption) tradeoffs between the poor & the very poor? E.g., 'is giving 100 USD/...
daaronr's user avatar
  • 111
1 vote
2 answers
175 views

Is Hal Varian's intermediate microeconomic externality graph wrong?

Here is the capture from Hal Varian's Intermediate Microeconomics chapter Externality. I remember clearly my lecturer said this graph is wrong several years ago, but I cannot remember the argument ...
LJNG's user avatar
  • 143
5 votes
1 answer
162 views

Pigouvian tax with general utility function

Suppose person a's consumption of good $y$ imposes a negative externality on person b. Person a's utility maximisation problem is $$\max_{x_a,y_a} \ u_a(x_a,y_a),$$ subject to $$p_x x_a+p_y y_a=e_a.$$ ...
dotpad's user avatar
  • 93
4 votes
2 answers
362 views

What is the problem with this opportunity cost example?

The "stand-up economist" Yoram Bauman used the concept of opportunity cost to make the following joke: [S]omebody offers you a choice between a Snickers bar and a package of M&Ms. ...
pythonuser's user avatar
1 vote
0 answers
34 views

Why the ageing population creates problems for a country to fund old-age social protection program and what solution do we have?

Senior citizens are considered as one of the vulnerable groups and therefore, they need some social protection during their old age. However, we also face the worldwide trend of an ageing population. ...
user34611's user avatar
0 votes
2 answers
237 views

Rawlsian SWF and Arrow Impossibilty Theorem

given Arrow impossibility theorem the only social welfare function that satisfies unrestricted domain, pareto and the independence of irrelevant alternatives is Dictatorship. However I was wondering ...
Hustler885's user avatar
1 vote
1 answer
104 views

Why isn't high inflation along with robust welfare a 'good' system?

High inflation, by definition, means that the demand for goods and services is higher compared to the demand for currency. In other words, people are more willing to give up currency for goods and ...
Ritesh Singh's user avatar
1 vote
2 answers
165 views

Nested/Recursive Dynastic Utility Functions

I want to find a way of representing a dynastic utility function in which not only the head of the dynasty's utility is dependent on its descendants' utility, but all members of the family tree gain ...
1.618's user avatar
  • 13
2 votes
2 answers
207 views

Microeconomics: first fundamental theorem of welfare

Can somebody tell me why part (2) of this proof is of any relevance? (1) Assume that $x$ is Pareto-dominated by $y$. Since $x_i$ is optimal for consumer $i$: if $y_i\succ x_i$ then $p\cdot y_i > p\...
lzudems's user avatar
  • 21
4 votes
1 answer
83 views

Is $(\mathbb{R}^m)^n$ the real coordinate space of dimension $m\cdot n$?

Very simple question here: say that there are n individuals and each individual $i\leq n$ has a consumption bundle $x_i\in \mathbb{R}^m$ (i.e. there are $m$ types of goods). Suppose that social ...
Nomista's user avatar
  • 43
3 votes
0 answers
123 views

Comparing 2 equilibrium values (competitive vs centralized): can I compare only 1st derivative of objective function?

I have a rather complex model where analytical solutions do not seem achievable (I also tried symbolic solving in Matlab and Python and could not find any) so that I cannot get an explicit expression ...
axelle's user avatar
  • 31
3 votes
1 answer
129 views

Are means-tested or universal programs more effective at reducing the poverty rate?

Advocates of means-tested programs frequently argue that they will remove inefficiences in the system by directing a larger proportion of the program's budget to people with a genuine need. By ...
Obie 2.0's user avatar
  • 131
2 votes
1 answer
170 views

How do you show welfare changes with limited entry versus perfect competition?

In Perloff's intermediate microeconomics book, he explains that producer surplus will increase with policies that limit entry. I get this intuitively - if we limit competition, producers will earn ...
K Carroll's user avatar
2 votes
1 answer
167 views

Deadweight Loss Due to Taxes Represented on a Graph of the Market?

Let's say a market is operating at equilibrium, with MSB=MSC, and a tax is imposed on the market. This would shift the supply curve to the left and cause a deadweight loss represented by the triangle ...
johnsmith13579's user avatar
4 votes
1 answer
83 views

Theory of and studies on the long-term effect of governmental redistribution

Proposition 28 from this 2000 survey (Fuller and Geide-stevenson 2010) of American economists shows that 49% of American Economics Association members agree, and 31% agree with provisions, that it is ...
Philip Meyer's user avatar
1 vote
0 answers
20 views

Is there a standard term for this tradeoff when subsidizing: inducing dependence vs providing support?

I've often heard it informally argued "people will become lazy if you give them handouts". Although I doubt the economic sophistication of most such assertions, I do think they have a real point: you ...
BoxBaron's user avatar
1 vote
0 answers
84 views

Identify the Pareto welfare weights

I am asked to identify the Pareto welfare weights from the FOC of the following problem $max_{{x_1}{x_2}} U_1(x_1)\ st\ u_2=U_2(x_2)\ and\ x_{1n}+x_{2n}=yn$ The Langrangian is: $L=U_1(x_1)+\lambda_1(...
mmendina's user avatar
  • 103
3 votes
1 answer
100 views

Is there any academic source that uses the following 'standard broad' definitions of externality?

According to answer to this question by KennyLJ., there exists the following definition of externality: The simple, standard, and broad definition I favor is this: A decision's effects are called ...
1muflon1's user avatar
  • 56.8k
6 votes
2 answers
213 views

Does consumer surplus over-weigh the interests of high-income consumers?

An individual's willingness to pay for a good not only depends on how much they value that good, but also on their income level (at least under the conventional non-economics definition of the word '...
H Rogers's user avatar
  • 638
0 votes
0 answers
25 views

What percentage of economists recommend basic welfare like food stamps and temporary assistance for needy families?

Is it similar to minimum wage in that opinion is approximately split down party lines, seen in this 2006 survey: https://people.uwec.edu/jamelsem/fte/fte/efl/teacher_stuff/articles/economists_agree....
Philip Meyer's user avatar
5 votes
1 answer
748 views

Is the consumer surplus on a Giffen/Veblen good negative?

When drawing the demand and supply curves on a quantity/product space for an upwards sloping demand, assuming the two curves intersect, I noticed that the traditional consumer surplus region lies ...
tox123's user avatar
  • 153
3 votes
2 answers
671 views

How can an outcome be Pareto efficient but not Kaldor-Hicks efficient?

An policy is a Pareto improvement if it makes some people better off and no one worse off. And a policy is a Kaldor-Hicks improvement if it can be turned into a Pareto improvement by redistributing ...
Keshav Srinivasan's user avatar
0 votes
0 answers
107 views

Second welfare theorem problem

I would like to get a better understanding of part c of the following problem. It appears to me that Walrasian allocations do not change but I want to confirm whether I am right or not. Thanks. ...
Lea's user avatar
  • 1
4 votes
1 answer
398 views

Do any social welfare functionals, other than maximin, meet all of Arrow's conditions plus invariance regarding ordinal level comparability?

In the literature on social welfare functionals, the only example I've seen of a functional which meets all of Arrow's conditions–––or at least utility analogues of Arrow's conditions–––plus ...
Nikelmouse Dylar's user avatar
1 vote
2 answers
424 views

What is the Walras law vs first welfare theorem

As far as I know, both of the first welfare theorem and the Walras law are closely tied to the invisible hand. what is the difference between them? thank you very much for your help
Fozoro's user avatar
  • 313
0 votes
1 answer
62 views

Does the 2nd welfare theorem involve government intervention? [closed]

How is the initial redistribution of resources carried out?
Marcusdaz's user avatar
1 vote
1 answer
13k views

Can consumer surplus be negative if a consumer is forced to make a purchase?

Assume there is a good that a producer sells for $100$. A consumer's willingness to pay for that good is $50$. However a government program forces consumers to purchase the good irrespective of their ...
Joseph's user avatar
  • 305
2 votes
1 answer
35 views

Calculating marginal tax rates when near a cliff

When using tax and transfer microsimulation models, a common approach for calculating marginal tax rates is to recalculate the tax liability when adding $1 to earnings. This will take into account ...
Max Ghenis's user avatar
3 votes
1 answer
6k views

What are general equilibrium effects?

I'm reading a lot on public finance and have been seeing a lot of mentions of measuring "general equilibrium effects". I know what general equilibrium is, but I don't know what general ...
EconJohn's user avatar
  • 8,405