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.

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34
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3answers
2k views

Is a universal basic income possible in the United States?

Is a universal basic income or unconditional demogrant possible in the United States? (For the sake of specificity I have focused the question on the US, though the question is certainly interesting ...
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Topological concepts in economic theory

QUESTION: What are the major or systematic applications of post-1960s mathematics to microeconomics? For example, in the late 19th century, Fisher first used the mathematical ideas of Gibbs to ...
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391 views

The Case for Basic Income in developed and underdeveloped countries

From what I can tell, the idea of the basic income guarantee is very popular in some circles as an excellent alternative to a lot of modern welfare systems. Has anybody developed a theoretic or ...
11
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2answers
198 views

Optimality of Zero Capital Taxation

The Chamley-Judd result of zero optimal capital taxation says that 0 capital taxation are required in order to maximize welfare at the steady state. The result is 30 years old. Still assuming that ...
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3answers
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Under what conditions is a monopoly undesirable?

First of all, I realize that "undesirable" is an ambiguous term. So, to clarify, when is a monopoly undesirable under the following metrics? Pareto efficiency Reduces consumer surplus Social Welfare (...
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173 views

Does immigration help to sustain welfare in rich European countries?

There is a lot of discussions about immigration and its effect on economies lately in Europe, so I'd like to ask a question. Is it true that immigration helps to sustain welfare in rich European ...
8
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2answers
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What is the purpose of the local non-satiation assumption in the first welfare theorem?

The profit maximization assumption implies $$\text{if } x_i \succ x_i^* \text{ then } p_ix_i > p_i w_i$$ Okay so this just says if the agent is utility maximizing / rational, then if he doesn't ...
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Why teach Arrow's impossibility theorem?

As part of a Macro class on social welfare, I am about to teach a very brief introduction to Arrow's impossibility theorem. The classic demonstration of this involves three voters choosing between ...
7
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2answers
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Why don't consumers subsidize monopolies?

Monopolies don't maximize welfare because they set prices above the equilibrium price, leading to dead-weight loss. It is possible for the government to provide a per unit subsidy to a monopoly until ...
7
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175 views

Are obstructed views a negative externality?

I recently read an excellent paper on the causes of high urban real estate prices in the United States, Why is Manhattan so expensive? Regulation and the rise in house prices (GLAESER, GYOURKO, and ...
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Pareto optimality with externalities

I'm reading the book "Economics of natural ressources and the environment" written by D. Pearce and R. Turner. They explain that the competitive equilibrium is not a Pareto optimum in case of (...
6
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1answer
88 views

Policy relevance of the optimal taxation given uncertainty about social welfare specification

One common criticism in the optimal taxation literature is the specification of the social welfare function. The optimal taxation literature (I have the Mirrlees framework in mind) relies on first ...
6
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1answer
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Weak Axiom of Revealed Preference

Maybe this is a well-known fact that I have somehow overlooked or forgotten etc., but I found myself curious recently if there are any conclusions about WARP holding over different dimensions for a ...
4
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1answer
332 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 ...
4
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144 views

Who originated the term “deadweight loss” and when?

I am looking for the first use of the term "deadweight loss." Any suggestions either as to who it was who first used it or how to search for it?
4
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Transformation Function

In Mas-Colell microeconomics textbook I have found that profit maximization problem (as well as many further optimization tasks) could be represented with application of some transformation function (...
4
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107 views

Is the standard of living of poor & middle class people higher than in the past?

I really hope this is not opinion based. I am just looking for numbers, links, straightforward proof if possible that the lifetime we are in now, this decade, most of us are living better than in the ...
4
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1answer
120 views

welfare economics journals

Does anyone know of journals related to welfare economics? If not, what is the next best alternative to find articles (preferably open access) related to current research in welfare economics? Thanks
4
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What is aid money for natural disasters spent on?

It's often said that the best thing you can do to help after a natural disaster is to give money. I have a simple question about how and where that money is sent. I imagine often resources can be ...
4
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1answer
63 views

How huge is the multiplicator of social welfare in current societies? [closed]

If you give somebody with a high consummate some extra money, most likely it will be spent. Having this spent for e.g. groceries this will make sales man, farmer, ... employed so they pay taxes are ...
3
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1answer
76 views

Why does optimal allocation call for unlimited distribution of information?

In his seminal paper Arrow (1962) states that information should be distributed without limit if an optimal allocation is to be achieved. Quote (p. 614-615): The cost of transmitting a given body ...
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3answers
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Interpretation of the growth rate of consumption in a simple one-good model

In Perman et al. "The efficient and optimal use of natural resources" it is presented a simple single-good model of welfare dynamic optimisation with non-renewable natural resource where: Obj: $$ max ...
3
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1answer
23 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 ...
3
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1answer
294 views

Change in Consumer Surplus with Two Price Changes: Is it Path Dependent?

The diagrams below showing demand for goods X1 and X2 are adapted from Johansson P-O (1991) An Introduction to Modern Welfare Economics (p 43). Demand for each good is assumed to be a function of its ...
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Universal Basic Income - Menial Tasks

The Universal Basic Income scenario seems to be one where people are free to cultivate their passions. From what I could gather, the main argument for this to be the best case scenario goes something ...
3
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1answer
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If Y=K+C, why the value of a marginal unit of capital is the same of the value of a marginal unit of output?

In a simple model of welfare dynamic optimisation with non-renewable natural resource where: $$ \dot S_t = -R_t $$ $$ \dot K_t = Q(K_t,R_t)-C_t $$ one of the first order condition is that $P_t=\...
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138 views

Teaching ethics and its Economic value

Is there any literature that considers the benefits of ethical behaviour or teachings in Economics in terms of its value added to human capital? If there is no difference in value added, then is ...
3
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79 views

Impact of a reduction of distortions in a flat consumption tax

I ask about the survey results of some prominent Australian economists shown here (Which is a similar Australian-centric version of the very interesting IGM Forum Surveys). The results of the survey ...
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0answers
39 views

Has the shrinking of the American household improved or diminished household welfare?

Over the last fifty years U.S. average household size has declined dramatically. When making within-year comparisons of household income, it is regarded as good practice to adjust for adult-equivalent ...
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79 views

Transportation models in economics

How would one go about modelling the effectiveness of public transportation? More specifically how does one go about comparing two transit systems in terms of their ability to move a larger numbers of ...
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2answers
95 views

What Is Social Security Invested In?

As a self-employed business owner, I am paying approximately 15% of my income to social security, yet I keep hearing that they're "running out of money for it." I'm a little confused about this: 15% ...
2
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1answer
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equilibrium, optimum, and decentralizing the optimum

I'm reading a paper on parking: Anderson & de Palma, 2003, The economics of pricing parking. The authors repeatedly refer to either 'decentralizing the optimum' or 'the optimum can be ...
2
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1answer
135 views

What is the relation among “welfare economics”, “institutional economics”, “environmental economics” and “neoclassical economics”

I'm doing research about environmental economics, being myself a beginner in the subject. I got confused with the branches and subdivisions of the schools of thought. Is environmental economics a ...
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2answers
80 views

Understanding minimums in the calculation of Human Development Index

In the calculation of HDI, three indices are involved. One of them is the GNI index. In calculating this index, there's some scaling done. Quoting from the UNDP Technical notes The low minimum ...
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2answers
113 views

Economic implications of allowing competition with essential services i.e police, fire department, etc

I'm wondering what are the implications of allowing competition between firms that deal with essential services in public welfare. I.e assuming there is no government regulation of such services, what ...
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0answers
147 views

First Welfare theorem proof for local nonsatiation

I know that the First Welfare theorem holds for pure exchange economies for strict monotonicity of preferences, and logically it should also hold for local nonsatiation, but does anyone have a simple ...
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0answers
30 views

Microeconomic Modeling of Zero-Rated content

I'm currently writing my Bachelor Thesis which discusses the Question: Does Facebook's free Basics Programm (A website which lets people in poor countries access Internet Services without paying ...
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1answer
133 views

When were the First and Second Welfare Theorems proven? [closed]

What years and by who were the first and second welfare theorems first proven?
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1answer
572 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 ...
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1answer
811 views

Is the convexity of production sets necessary for the welfare theorems?

I have read that the convexity of production sets (for instance non-increasing returns to scale) is not a necessary assumption for the first welfare theorem but it is for the second welfare theorem. ...
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1answer
277 views

What is a good AUSTERITY indicator?

I am writing a paper on European poverty and I am using a treatment control setup similar to Difference-in-Difference methods. Now, since the data I am using is rather recent, I would like to ...
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1answer
643 views

What are general equilibrium effects?

Im reading alot on public finance and have been seeing alot of mention of measuring "general equilibrium effects". I know what general equilibrium is, but i dont know what general equilibrium ...
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2answers
56 views

What's the term for an economic policy that has negligible effect for most, but a significant effect for a few?

I remember this came up around tariffs in the US on aluminum. They have a negligible effect on the price of an aluminum can, but aggregated across all the aluminum cans sold, it can have a significant ...
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1answer
135 views

What would happen if total welfare were evenly distributed?

Suppose that there is a market with a large number of consumers and producers. Assume that the government knows the reservation prices of all people in the market. Suppose that the government uses ...
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1answer
32 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 ...
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2answers
125 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
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Excessive entry without fixed costs

Mankiw & Whinston (1986) show that the market may contain too many firms. The intuition is that if a firm charges a suboptimal high price, a rival has a demand curve that is "too high" and can ...
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0answers
249 views

The role of relative prices in markets on the allocation of resources and the effect on living standards [closed]

How do the role of relative prices affect how resources are allocated? And as a result, how does this effect living standards? Would it be something along the lines of how changes of relative prices ...
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0answers
44 views

Finland's Universal Basic Income Test - how much in local terms?

Finland is currently trialling UBI at a rate of €560 (£473) per month. I'm looking for some contextualization of this figure. Is this figure supposed to cover housing costs, or are they paid from a ...
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What are the main long-standing Keynesian economic programmes in Western nations?

Much of US military spending is more easily rationalised as a job-creating programme than a form of defence, e.g. vehicles Congress funds despite Pentagon insisting it doesn't need or want them or ...