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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56 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 ...
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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 ...
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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 ...
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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(...
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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 ...
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Are there any studies that examine the relationship between welfare spending and unemployment?

Basically I want to know if there are any studies that examine whether or not people on welfare are disincentivised to work, or if they are "trapped" by welfare.
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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 '...
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23 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....
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57 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 ...
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11 views

Optimal tax level that raises revenue R < e given Hicksian demand elasticities

I have to find a uniform tax rate that raises revenue R < e and I am given a Hicksian cross price elasticity demand matrix below. I know I want to use Ramsey's first-best but I am not sure, how to ...
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132 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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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. ...
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Do any social welfare functionals meet all of Arrow’s conditions, plus absolute-scale full-comparability, but no other informational condition?

I’ve been trying to think of social welfare functionals which meet all of Arrow’s conditions–––unrestricted domain, weak Pareto, independence of irrelevant utilities, and non-dictatorship (see this ...
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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 ...
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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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Does the 2nd welfare theorem involve government intervention? [closed]

How is the initial redistribution of resources carried out?
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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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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 ...
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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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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 ...
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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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71 views

Universal Basic Income [closed]

In 2017 some countries have adopted the Universal Basic Income as an alternative to Welfare Payments, my question is, is it economically feasible by governments?
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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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Do I understand the second welfare theorem correctly?

As far as I understand, the second welfare theorem says that all Pareto-optimal allocations can be reached by market equilibrium on free competitive markets. Yet it seems that this understanding is ...
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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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966 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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163 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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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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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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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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313 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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47 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 ...
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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?
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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 ...
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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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Fraction of labour force providing income redistribution services

What % of the labour force for an OECD country like the UK (mostly civil service I'm guessing) deals primarily with income redistribution, rather than income generation? Would a simple flat income tax ...
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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 (...
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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 ...
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586 views

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 ...
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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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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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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 ...
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80 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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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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69 views

The Economical “justification” of mass killings

Throughout history people have engaged in wars and mass killings. I'm sure similar stories exist in all parts of the globe, throughout the world. So what is the story? If the world revolves around ...
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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 ...
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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 ...
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Is an unconditional basic income pleasurable idea or it cannot be achieved? [duplicate]

I would like to know if you can tell me, what are economical theories that are in support of this kind of social system if any? Can this system be efficient?
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135 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