Skip to main content
17 votes

Why teach Arrow's impossibility theorem?

What you describe has not much to do with Arrow's impossibility theorem. This is called the Condorcet paradox. The preference profile you gave is used to demonstrate that even if all individual ...
Giskard's user avatar
  • 29.6k
16 votes
Accepted

Why teach Arrow's impossibility theorem?

I see the important lesson of the impossibility theorem as establishing that it is not generally speaking possible to have nicely behaved preferences of groups, even if individuals have nicely ...
BKay's user avatar
  • 16.3k
13 votes

Why teach Arrow's impossibility theorem?

There is a temptation for economists to be utilitarians - to go around trying to maximise some measure (total, average, minimax as in Rawls ...) of utility. I think this happens even to economists who'...
Tony Curzon Price's user avatar
8 votes
Accepted

Would a fair distribution of wealth from the super rich increase the purchasing power/life quality of the average person?

tl;dr: In the hypothetical you set in the body of your question redistribution cannot help the poor. However, this is not because redistribution could not significantly raise the welfare of the poor ...
1muflon1's user avatar
  • 56.4k
5 votes
Accepted

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

There are at least two other examples of SWFs that satisfy these conditions. The first is a positional dictatorship. Let N be the number of individuals (assume it is fixed). For any k between 1 and ...
Marcus Pivato's user avatar
5 votes

Question about Social Welfare Function and Social Profile

In its most general formulation, a social welfare function is just a utility function representing the preferences of "society as a whole" (or the preferences of a hypothetical "...
Marcus Pivato's user avatar
4 votes

Non-axiomatic definition of well-being

When you say that a policy's objective is to "maximize well-being", presumably you mean "maximize collective well-being". And presumably, by "collective" well-being, you mean some sort of aggregate ...
Marcus Pivato's user avatar
4 votes
Accepted

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

This is a very broad question and no one except the respondents in question know exactly what they believe and why. However, I suspect one important result in this context is the Second Welfare ...
BB King's user avatar
  • 6,148
4 votes

Rawlsian SWF and Arrow Impossibilty Theorem

Independence of irrelevant alternatives prevents you from using the information needed to implement a Rawlsian SWF; the information who is society's worst-off cannot be used. Indeed, the relevant ...
Michael Greinecker's user avatar
3 votes
Accepted

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

Consumer surplus is their willingness to pay minus the price they pay, and producer surplus is the price they receive minus their willingness to receive. So if you are assuming that consumers are ...
Regio's user avatar
  • 4,188
3 votes
Accepted

Anonymity in social welfare function

Anonymous/impartial SWFs focus only on the pattern of well-being, and not the identities of the people who end up at particular well-being levels. Identities here simply means names. When applying ...
Herr K.'s user avatar
  • 15.4k
3 votes
Accepted

Can we add well-being into macro model as an endogenous variable?

One can model anything, that's why it is a model. The real question is what the value of such a model would be. More to the point, I think this would be a very hard thing to do sensibly because how ...
Maarten Punt's user avatar
  • 2,375
3 votes
Accepted

Rawlsian SWF and Arrow Impossibilty Theorem

Let's say there are individuals 1 and 2, and alternatives A, B, C, and D. Society uses the Rawlsian SWF and thus ranks alternatives according to their maximal rank within individuals' rankings. Denote ...
VARulle's user avatar
  • 6,825
3 votes

Social welfare in terms of preferences

Usually one tries to construct a Social Welfare Function (SWF), i.e. a general rule how to aggregate individual preferences to a social preference relation. Then various axioms are formulated that a ...
VARulle's user avatar
  • 6,825
3 votes
Accepted

Social welfare in terms of preferences

The problem as you have described it is somewhat underspecified. At least three pieces of information are required to make further progress: Do you want a social welfare function (SWF), or just a ...
Marcus Pivato's user avatar
3 votes

Axiom of Minimal Liberalism & Sen's Theorem of Paretial Liberal

Your question is a bit confused, because it mixes together several different things. For example, in the title, you mention Sen's Minimal Liberalism, but in the actual question, you don't mention Sen ...
Marcus Pivato's user avatar
3 votes
Accepted

Universal Limited Income

Would the state be able to guarantee a worthy socio-economic status to everybody with the money earnt this way? No, for several reasons. First the proposal flies in the face of 101 rules of optimal ...
1muflon1's user avatar
  • 56.4k
3 votes
Accepted

Is there a measure of social inequality?

The matter is still largely unsettled, namely, there is not a broad consensus on how to measure it. Lookup Binelli, C., Loveless, M., & Whitefield, S. (2015). What is social inequality and why ...
Alecos Papadopoulos's user avatar
3 votes

Is it possible that pensions (public or private) be actual money saved and “sent” into the future, instead of borrowed from future generations?

It is not only conceivable, but actually the case for some pension schemes including some public sector schemes, that what people pay (eg as a deduction by employers from their employees' salaries) is ...
Adam Bailey's user avatar
  • 8,369
3 votes
Accepted

Is my understanding of Arrow's dictatorship correct? The dictator is free to update her preference and the social choice will always follow her taste

Yes, this is correct. If $i=1$ is a dictator for the social choice rule $f$, then this means that for any profile $\langle R_i \rangle_{i=1}^I$, we have $f(\langle R_i \rangle_{i=1}^I)=R_1$. Hence, ...
Marcus Pivato's user avatar
2 votes
Accepted

Venezuelan black market exchange

The official rate is about 10, but the black market rate is about 1000. Also, yes, apparently the real exchange rate at the 1000 rate is pretty low, in the sense that one dollar buys a lot of local ...
Fix.B.'s user avatar
  • 2,658
2 votes

Universal Basic Income - Menial Tasks

Pretty much by definition, "necessary" jobs have to be filled. Wages would have to be bid up so that the positions get filled. This implies some form of relative price shock, or inflation. If robots ...
Brian Romanchuk's user avatar
2 votes

:History: Industry threatening to leave if social change takes effect

What's going on when a for-profit company makes a threat? The same thing that is happening when does anything. It is trying to increase its profits, relative to what would happen if it didn't do the ...
410 gone's user avatar
  • 8,168
2 votes

Can monopolistic dead weight loss persist without government intervention? If so how?

If I understand you correctly, monopolistic deadweight loss persists without gov intervention because of the following: Economies of Scale: if monoplist is able to produce at below the market prices ...
london's user avatar
  • 1,990
2 votes
Accepted

Why would a politician sollicit foreign investors to come and buy real estate?

The owners of existing housing certainly benefit from increased demand and higher prices for their assets. The total benefit to society may be positive or negative, depending on whether current owners ...
Sander Heinsalu's user avatar
2 votes

Why is the equilibrium network size can be less than the socially optimal size in networks w/ positive externalities for single system?

The equilibrium network is smaller than that chosen by a social planner because agents do not internalize network externalities. Vaccination against a contagious disease is a standard such example. ...
Michael's user avatar
  • 2,619

Only top scored, non community-wiki answers of a minimum length are eligible